This news comes just a day after it was revealed Viacom struck a much-needed renewal AT&T’s DirecTV deal for distribution -- around 19.2 million for its satellite TV service and 3.4 million from AT&T’s fiber-based U-Verse.
Why was this much needed? Think $1 billion worth of carriage fees, about one-quarter of all Viacom carriage fees the company gets.
Viacom and CBS representatives had no comment about any current talks. A possible recombination between the two has gone on for several years now, with National Amusements, the majority shareholder of both companies, pushing for it.
Here’s some speculation: Viacom did a renewal deal for DirecTV, but maybe not at the same revenue levels it got in the past.
Todd Juenger, media analyst for Bernstein Research, wrote in a note: “We think AT&T could have paid Viacom down by 20%.” But he added Viacom reconfirmed steady affiliate growth guidance.
Concerning a CBS deal, imagine if a senior executive said this after the DirecTV agreement: “Enough, we need to be bigger immediately.”
It’s no secret cable-only networks groups -- while having much to crow about in terms of niche, targeted viewers -- need a bigger business connection with a broadcast network, TV-movie studio, big digital media platform or some booming global TV-movie business.
Viacom has made some positive moves, including buying up Pluto TV, an established but small, ad-supported OTT platform, as well as doing other traditional pay TV renewals and striking vMVPD deals.
All traditional TV networks have little choice, especially about getting into the digital OTT game quickly. But more importantly, they need scale. Viacom and other cable network groups have been losing 2% to 3% per year in subscribers from traditional pay TV groups.
Broadcast networks aren’t immune from this, either. But they seem to fare better in terms of distribution from YouTube TV, Hulu with Live TV, Sling TV, DirecTV Now, and others.
And it is not digital pay TV companies that don’t want Viacom networks. They just don’t want to carry all its 23 networks, perhaps only the best performing five or six big brands.
Interestingly, Viacom, perhaps seeing the writing on the wall, has been focusing on just this for the two years. CEO Bob Bakish is busy touting MTV, Nickelodeon, Nick Jr., BET, Comedy Central and Paramount.
The New York Post article, in regards to the recent Viacom-DirecTV deal, now says Viacom-CBS merger talks can resume because the deal “cleared a major hurdle.”
It’s not just a hurdle. It’s a big wall.