CBS-Viacom Merger To Close Next Month

When the New Year dawns, CBS Corp. should no longer be a stand-alone company, but reunited with Viacom after nearly 16 years of separation. “We are on track to close in just a few weeks,” CBS Corp. CEO Joe Ianniello told analysts in the company’s third quarter conference call Tuesday morning. He will continue to oversee the CBS-branded assets, but the merged company will be headed by Viacom’s Bob Bakish as CEO.

For 3Q, Ianniello said growth was driven by an 18% increase in subscriber fees: retrans, reverse comp and virtual MVPDs. And that was despite a 19-day blackout by AT&T in a carriage dispute. While Wall Street has been concerned about the subscriber impact of cord cutting on broadcast and cable companies, the CBS executive declared that total subs are up 4% year-over-year, including the vMVPDs.

Along with licensing its content to streaming companies, CBS Corp. has its own direct-to-consumer (D2C) streaming services with CBS All Access and Showtime OTT. “D2C revenue was up over 39% for both the quarter and year-to-date, as consumers shift from traditional bundles to skinner bundles, to CBS All Access and to Showtime OTT,” Ianniello told analysts. “We are getting paid higher rates per sub,” he proudly declared.

CBS All Access will soon be adding its first live sports component with Champions League soccer. All 400 matches will be on All Access and select games on the broadcast network. Ianniello bragged that CBS All Access has a unique appeal to consumers with its live programming, due to the local news component from the deals that CBS cut with its local affiliates and now the addition of live sports.

For the CBS O&O stations, the “Local Media” segment, CFO Chris Spade reported that 3Q revenues decreased 6% to $406 million. She attributed that to the lack of political advertising seen a year earlier and the impact of the AT&T blackout. “At the same time, retrans continues to be a strong driver,” she told analysts. For 4Q, Spade says non-political revenues are pacing to be up mid-single-digits.

Like other broadcasters, the CBS O&O stations are anticipating record-breaking political ad sales in the coming year. Ianniello noted that the company’s Boston stations are already receiving orders for the New Hampshire primary in February and the stations in Los Angeles, San Francisco and Sacramento “will all benefit in 1Q from the California primary moving from June to Super Tuesday in March.” All of the major CBS markets will have CBSN up and running with local news online by early 2020, which, he said, will allow for political sales across a more robust multi-platform environment.