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ViacomCBS CEO Bob Bakish downplays idea of a merger to get scale in streaming

ViacomCBS CEO Bob Bakish this morning downplayed his company’s interest in a potential merger — like one with its partner Comcast. At the WSJ Tech Live conference today, the media company exec said the company’s current strategy was to focus on its “organic plan” in streaming, which would be the best path forward to create shareholder value. He also claimed it was still “early days” for its new service Paramount+, essentially downplaying the ideas that a merger would be necessary for the service to succeed.

Pressed for comment on the matter, Bakish didn’t give a direct answer as to whether the company is considering any M&A deals, and instead touted the growth Paramount+ has been seeing throughout the year.

“Paramount+ is seven months old. So it’s very early days,” he said. “We have nice subscriber acquisition in Q1 and Q2, frankly on the back of a pretty weak content slate,” he continued, adding that the slate would grow significantly later in the year. “We see nice momentum ahead of us. And that’s the lane I continue to feel we should be focused on,” Bakish noted.

Of course, describing Paramount+ as a new service is only somewhat accurate.

In reality, the service is the successor to the company’s earlier streaming endeavor, CBS All Access, which rebranded and expanded to include Viacom content following the 2019 CBS and Viacom merger. In a sense, it’s a new product with a larger library, but the core service has been around for years. And, as of yet, it has not been able to pose a viable threat to top rivals like Netflix or Disney+, for example, which have 209 million+ and 116 million subscribers, respectively. In fact, CBS historically wouldn’t even break out numbers for CBS All Access separately from Showtime. That tradition continues at ViacomCBS which announced in Q2 the two platforms — Paramount+ and Showtime OTT — had together topped 42 million paid global subscribers in the quarter.

That’s led to the company looking for other ways to drive growth — including, recently, through international joint ventures, like its new partnership with Comcast on SkyShowtime in Europe, for instance.

Despite Bakish’s remarks downplaying M&A, Comcast’s NBCU and ViacomCBS had been talking about the various ways they could work together, reports have said. This has included discussions of offering a bundle of their streaming services, Peacock and Paramount+. But a merger or acquisition could always be another option. While these types of deals are more complex, the question remains as to how either service will get scale in the current market by going it alone.

Bakish, speaking at today’s event, seemed to dismiss the idea that M&A was the way to go for now, however.

“At the end of the day, we’re focused on shareholder value creation. As we look at the landscape today, particularly where our stock trades at the moment, we believe the strongest route to shareholder value creation is executing against our organic plan in streaming,” he said.

Further pressed on the idea of a horizontal merger in order to achieve faster scale, Bakish recalled that not all deals work out as expected.

“Consolidation has been true in business for a very long time, whether that’s vertical mergers, horizontal mergers — that’s a tried and true business technique. By the way, a lot of deals get unwound too when they didn’t work out well. Ultimately it comes down to execution,” he said. He then touted the company’s asset base which includes a Hollywood film studio, 100-year old library, and significant ongoing production.

“So I look at that content asset and deploying against a  streaming platform — in this case, Paramount+ — there’s real momentum already and there’s real growth ahead. And I think that’s a very compelling lane to be in,” he said.

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