CBS’s Sale Drama Is A Harbinger For The Industry

If you’ve been following the Paramount Global soap opera, you know that the company is for sale, except when it is not for sale, though for the right price it is certainly still for sale. In other words, look for an announcement at any moment of yet another future owner.

There have been so many twists and turns to the Paramount story that one needs an Excel spreadsheet to keep up with the players. Another complexity is that holders of Paramount Global stock don’t actually control the company. That honor belongs to National Amusements, a family company controlled by Shari Redstone, daughter of the late Sumner Redstone.

If you find all this confusing, you might want to wait and read the inevitable insider’s book, sure to be titled All About Shari. Even better, hold out for the television series, streaming on what was formerly known as Paramount+. Look for a brief cameo from Les Moonves. You do remember Les Moonves, right?

The saga at 5555 Melrose Avenue has become so interesting to watch that one wonders why it is not yet part of the Paramount Pictures Studio Tour. There is plenty of material to work with, starting with the executive offices where tourists will be able to see in real time how many presidents the company has today.

Next stop could be a fascinating presentation on how easy it is to lose billions of dollars through streaming while looking like you are smart. As a bonus, participants could watch a studio audience guessing game predicting how far below $10 the company’s stock will drop that day. The tour would end with lunch at the commissary, perhaps soon to be run by McDonald’s. 

Forgive me. I am probably being unfair to McDonald’s.

Actually, the Paramount epic is quite simple. When CBS and Viacom merged five years ago to form Paramount Global, the combined company was worth around $30 billion. Had Shari Redstone sold her controlling interest back then, her family would have done quite well. Instead, she decided to oversee the new company, some say to prove something to a dead father who never believed in her.

Unfortunately for Redstone, the company is now worth less than $8 billion, a $22 billion drop. Had Redstone accepted the last Skydance offer, she would have reportedly ended up with less than $2 billion for her controlling shares, a mere pittance compared to past value. Who could be expected to live comfortably on that?

Even so, Redstone still has a powerful motive for selling. Paramount Global is unprofitable. The longer she waits to sell, the riskier things become.

Almost unmentioned in the ongoing Paramount narrative is the one part of the company that does remain profitable: CBS and the CBS owned television stations. That’s because in a world obsessed with all things streaming, ownership of an over-the-air network sounds quaint, like owning a gasoline powered car when all your friends are going electric. 

The gasoline-powered car analogy is actually a good one. Left in its current state of cheap network programming CBS might well wither away. But what if an enterprising new owner were to take a fresh look at the role of networks and television stations? Like hybrid cars, which are currently the first choice of most buyers, could CBS evolve into a fresh idea?

Remember that Rupert Murdoch actually did reinvent the network model when he launched the Fox network all those years ago. It’s easy to forget that Fox does not have a news division and only programs two hours of primetime a night. I’m not saying that is the answer for CBS, but it does remind us that there is more than one way to look at the future of network television.

The next question is who would buy CBS? Byron Allen remains at the ready with press release in hand. Warner Bros. Discovery has also been mentioned, in part because folding the failed CNN into CBS News sounds like the kind of thing David Zaslav might do. No doubt many other suitors would show up should the network actually be spun off.

Among those suitors might be some of the major station group owners. Nexstar already owns a minor network, so why not upgrade to a major? Gray just built a network production center in Atlanta. Tegna could use a shot in the arm, and the list goes on. All of these companies are used to dealing with billions of dollars in debt. What are a few more billion here and there?

When you think about it, ownership by a company that actually needs a viable network to function might be a pretty good idea, especially if that company was committed to preserving our nation’s critical over-the-air broadcast system.

There are, however, two large hurdles that will be difficult for any potential owner to overcome — an activist FCC and an equally defiant Justice Department, both of whom seem to have an aversion to any business merger that might make a profit. It’s also difficult to even know what the rules are these days because the FCC has been inventing new ones as it goes. 

Putting those barriers aside, many observers seem to think Paramount Global will have a new owner sometime this year, after which CBS will be divested. It is a rare thing for a network and its owned stations to come up for sale, something that hasn’t happened since Westinghouse bought CBS back in 1995, so this would be a very big deal. 

There would also be wider industry implications since the parent companies of both ABC and NBC would be watching closely to help determine their own future courses.

Other than a bestselling book and a successful streaming series, knowing the final outcome of this saga is impossible. But make no mistake: The eventual sale and possible breakup of Paramount Global will be the first step in determining the long-term role of over-the-air networks. 

The Tiffany Network days of CBS are long gone, but this is not the time to mourn the past. Whoever ends up with CBS has a future to build. Let’s hope they do it well.

Hank Price spent 30 years leading television stations for Hearst, CBS and Gannett while concurrently building a career in executive education. He is the author of Leading Local Television and two other books.