Why ViacomCBS Is Not Diving Headfirst Into the Streaming Era

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Soon-to-be-merged company sees itself as both a buyer and a seller

Like all media companies, ViacomCBS wants to take advantage of the new streaming era. But while Disney and WarnerMedia are pooling all their assets into one, big-top streaming service, ViacomCBS wants to be both a buyer and a seller. Viacom has shown in the last few months a willingness to make revenue-generating deals on its library of content rather than hoard those rights for its own internal streaming services. “I think it is a smart strategy, as there is growing demand for premium content and ViacomCBS has the ability to sell shows with high awareness into the market, especially as others self-license their content,” MoffetNathanson analyst Michael Nathanson, told TheWrap. Just this week, Viacom’s Nickelodeon announced a multiyear output deal for films and TV series with Netflix. Thursday morning, Viacom announced that Netflix bought the rights from Paramount to develop a fourth “Beverly Hills Cop” film, with Eddie Murphy attached. And last month, the company sold the exclusive streaming rights to Comedy Central’s “South Park” to HBO Max in a deal worth at least $500 million. Additionally, Disney+’s upcoming drama with Gina Rodriguez, “Diary of a Female President,” is produced by CBS TV Studios. “Demand for content from third parties is incredible. And the combination of our assets and capabilities – with the fact that some of our competitors are pulling back – makes this sector an enormous opportunity,” Bob Bakish said during the company’s earnings call Thursday morning. He noted that between Viacom and CBS, they have 750 series that are either ordered or in production, on top of a library that includes 140,000 episodes and 3,600 films. “I strongly believe this level of volume is sufficient to supply our needs and third parties, so why not access the revenue, income and cash flow in deals.” Bakish believes their level of production and development volume can feed both their needs and those of third parties. They also have or will have the “financial resources” to support it — esp. after the merger While Disney+ got off to a strong start by getting more than 10 million sign-ups on Day 1, Disney is forgoing $150 million in licensing revenue next year, and doesn’t expect to turn a profit until 2024. Not only that, but Disney is sinking $1 billion into Disney+ on content alone next year, and will double that by 2024. WarnerMedia will be spending about $4 billion on HBO Max content by 2025. It’s a similar gamble that WarnerMedia, with HBO Max, and NBCUniversal, with Peacock are taking: Each of them is hoarding their own content for themselves. Bakish believes that ViacomCBS is primed to take advantage of that. When Viacom and CBS complete their merger early next month, the company will have some five different, although smaller, streaming services. Those will be led by CBS All Access and Showtime OTT, which have about 8 million subscribers (projected to be 25 million by 2022) between the two of them — while they don’t break those numbers out individually, executives have said it’s close to an even split between the two of them. There is also the free, ad-supported PlutoTV and smaller services like kids-focused Noggin and BET+, which launched in October. CBS has propped up All Access with a massive catalog of TV shows including “I Love Lucy” and “Fraser,” along with original programming like “Star Trek: Discovery” and Jordan Peele’s “Twilight Zone” reboot. Viacom features a stable of cable networks like MTV and Nickelodeon, along with the Paramount film and TV library. Rolling all of that, including Showtime, into one big streaming offering has the ability to transform All Access into a potential streaming powerhouse. But Bakish believes that would be leaving money on the table. The next few years will a massive sea-change in the industry and, if nothing else, ViacomCBS offers a new wrinkle for the streaming era. Tony Maglio contributed to this story.