ViacomCBS’s president and CEO Bob Bakish told investors this week that the company has no urgent need to go after any major acquisitions right now.
During the company’s 40-minute annual meeting of shareholders, Bakish remarked that he was pleased with the growth in usage of the newly combined Viacom and CBS Corporation streaming platforms and promised that a major overhaul of the CBS All Access subscription platform is planned to incorporate more ViacomCBS brands.
On the topic of M&A, Bakish was adamant, saying “There are no must-have assets out there for us in the landscape,” he said, stating to be both “highly disciplined and highly opportunistic” in evaluating opportunities that might arise.
“You should not expect us to do material deals in the current environment,” he said.
Shari Redstone, the non-executive chairman of ViacomCBS, emphasized her unwavering support for Bakish and the management team that has been consolidated in the five months since the merger closed in early December 2019.
“We totally believe the stock is dramatically undervalued,” Redstone said during the Q&A session of the meeting, which was held remotely via webcast given the coronavirus lockdown. “The market is looking for us to prove that we can execute on our strategy. I’m confident we will do so more quickly than anyone expects.”
Bakish and Redstone repeated that the company’s focus was on studios, networks, and streaming which was detailed on last week’s quarterly earnings call. Bakish called attention to the “milestone growth” in recent weeks for Pluto TV, the ad-supported streaming platform, and CBS All Access.
“Our growing scale, audience reach and earnings power will become even more evident as the market rebounds,” Bakish said. He went on to explain that Pluto TV is serving as a “massive free front door” to help channel paying customers to the subscription CBS All Access and Showtime streaming platforms.
Advertising sales were pummeled in Q1 2020 by the impact of the coronavirus pandemic. National broadcast has weathered the best, followed by cable and digital. Bakish said that the weakest numbers are at the local level among ViacomCBS’ 28 owned-and-operated (“O&O”) stations.
Bakish explained that ViacomCBS’ sales is seeing improvement in scatter ad sales activity compared to April. “We’re seeing some green shoots in advertising but we continue to need to manage through it,” he said.
The CEO continued to stress that the combination of Viacom and CBS Corporation is helping the company compete with its larger rivals as it has more to offer key constituencies such as ad buyers and MVPDs (multichannel video programming distributors).
“One of our largest clients recently came to market with Q2 scatter dollars. We know we got the largest share,” Bakish said.
The Hollywood Reporter previously reported that Bakish’s main priority for 2020 is creating a “supercharged version” of CBS All Access by expanding content. . The upgraded platform is expected to include content from Viacom properties like MTV, Comedy Central, and BET. Nickelodeon content is already available on CBS All Access as of November 2019. The plan is to also include access to the Paramount Pictures and Miramax film libraries.
To pay for this expansion, Bakish is said to be trying to save cash by selling both Black Rock, the New York City headquarters of CBS, as well as considering the sale of CBS’s publishing arm, Simon & Schuster.
The funds from those transactions could also pay for the acquisition of Lionsgate—the company ViacomCBS was negotiating to acquire from Starz last year.
Lionsgate is an intriguing opportunity to expand ViacomCBS’s growing movie library as the studio has franchises like the popular “Hunger Games” and “Twilight” movies. Lionsgate is also home to favorites like “Tyler Perry’s Madea,” “Saw,” and “John Wick” movies.
Lionsgate also has the distribution rights to several recent Best Picture-winning or nominated titles like “Sicario,” “The Big Sick,” and “Wonder,”—injecting a degree of relevancy to the available ViacomCBS offering.
ViacomCBS certainly will see many M&A prospects in the future. However, experts contend that if Bakish wants to significantly strengthen the company’s position in the market, he should begin targeting properties that can strengthen ViacomCBS’s movie library.
Another potential target is MGM Studios. The company is attractive because it has been bolstering its premium cable channel Epix as of late. Epix has added scripted shows such as “Godfather of Harlem” and “Pennyworth.” And if ViacomCBS wants to execute a strategy of boosting its premium library, adding access to Epix as part of a larger acquisition would be a good move.
The Lionsgate acquisition may also mean acquiring Starz. This purchase would further solidify ViacomCBS’s long-term plans to compete in the ever-increasing subscription video on demand (SVOD) market.