The newly formed ViacomCBS does not come as a surprise, even as it signals some big changes for broadcasters and advertisers alike. For example, we alluded to the potential for a merger in our recent trend report aimed at TV advertising in 2019 versus 2018.
“Viacom’s Paramount film studio and MTV and Nickelodeon cable networks will be added to the broadcast giant CBS,” writes Edmund Lee at The New York Times. It’s also a clear move to bolster streaming capabilities for both companies. “The deal will allow the company to invest more in streaming, which is the future of entertainment. CBS already has a thriving digital television service with original series.” At the same time, Viacom brings the extensive catalogues of Paramount, MTV and Nickelodeon.
How the Merger Impacts the TV Landscape
Back in May, we wrote on how the past year of mergers have dramatically transformed the TV landscape, pointing to the Viacom/CBS merger rumors as a sign of continuous change.
“If the merger between Viacom and CBS goes through, the newly formed network would become the third largest player in the market, alongside Disney and Comcast NBCUniversal,” we wrote. “And it would push the newly formed Fox Corp, which is still holding its own despite selling most of its assets to Disney, right to the bottom.”
The conjecture has now come to pass. Using 2018 total TV ad revenue as a proxy for future earnings, the merger makes ViacomCBS the third largest player in the market for linear TV ad revenue. Post-merger, ViacomCBS will see 18 percent of the market revenue — third behind Comcast NBCUniversal (20 percent) and Disney (21 percent).
What ViacomCBS’ Reunion Means for TV Ads
The ViacomCBS roster is huge, including all CBS channels, CBS Sports, Nickelodeon, Comedy Central, BET, and MTV — not to mention major film distributor Paramount.
This introduces both the possibility of new markets for advertisers and new opportunities for the networks’ ad sales teams.
In 2018, Viacom channels collectively sold ad space to over 2,000 advertisers, while CBS owned channels sold to over 1,500. At the same time, the networks only had a 36 percent overlap in advertisers. The merged networks and media properties should give their ad sales teams much more inventory to sell to the two-thirds of advertisers who previously went with one and not the other.
But that’s just linear TV space. The implications for streaming and over-the-top TV may be greater. Kelsey Sutton at AdWeek writes that the deal means ViacomCBS could emerge as a formidable streaming force. “When CBS and Viacom’s various streaming offerings come under one giant umbrella, the company will have about a half-dozen existing subscription and ad-supported services, some of which have been around for years and already boast millions of subscribers,” Sutton writes.
The result is an already diversified company seemingly ready to take streaming’s major players head on.