As CBS and Viacom dance around each other like teenagers at a ball, the U.S. implications of a merger have been widely covered. However, as the two consider rebuilding the House of Sumner over the next couple of months, one of the most interesting aspects is the growing power of their international business. Below, Deadline looks at what the combined company look might like internationally and the power dynamics between the global divisions.
Viacom has been building a far-reaching international business since the late 1980s with the launch of MTV in Europe and the international roll out of channels including Nickelodeon and Comedy Central. In recent years it has also purchased leading terrestrial broadcasters such as Telefe in Latin America and the UK’s Channel 5, which have helped bring in over $2B of revenues a year. Meanwhile, CBS, which does not break out its global financials, has been aggressively growing its international programme sales and made its first major international broadcast statement with last year’s acquisition of Australia’s Network Ten.
CBS, with its high-profile broadcast business and premium network Showtime and a market capitalization of around $22.5B is larger than Viacom, with a market cap of $14B, although, arguably, the latter has spread its tentacles further than its former sibling around the world.
Viacom’s latest push has been into Latin America after buying Argentinean broadcaster and producer Telefe in 2016 for $345m. While Telefe previously produced a raft of programming in its own market, it didn’t exploit this and rarely owned international rights. However, since being taken over by Viacom, it has brought together all of its production capabilities, including Porta Dos Fundos, the Brazilian comedy producer it acquired in 2017, to ramp up the global reach of its content.
Subsequently, in addition to scoring primetime commissions in Mexico with Amar Despues De Amar (To Love After Love) and Sres Papis (Dear Daddies), it has sold a raft of projects in the U.S. and struck partnerships with its own U.S. units. In 2016, NBC struck a deal to remake Un Año Para Recordar (A Year To Remember, left), written by How To Get Away With Murder’s Michael Foley and more recently Telefe teamed up with Paramount TV to develop multi-lingual Nazi thriller Cazadores (Hunters), written by Narcos’ Jason George. It has also stepped up its feature film production, putting its weight behind Animal, a drama from Oscar-winning screenwriter Armando Bo, and Natalia Oreiro and Diego Torres-fronted comedy Re-Loca.
Earlier this week, Viacom CEO Bob Bakish, who was previously the company’s international boss, said Telefe was “serving as a platform for global growth”. “We acquired Telefe because we knew we wanted more scale in Latin America across audience, advertising and distribution. We also knew we wanted to own more content and production capabilities to satisfy the huge and growing demand for quality Spanish language content to feed global platforms, both ours and others,” he said, adding that he expects it to become one of the largest Spanish-language content firms alongside the likes of Televisa.
Similarly, in the UK, it has been ramping up C5’s in-house production arm Elephant House Studios, with series such as entertainment formats Make Or Break and Car Crash Couples as well as factual titles such as Cruising With Jane McDonald.
It also recently sold a 1%, controlling, stake in its Indian business Viacom18 to TV18, backed by Mukesh Ambani’s Reliance Industries. Although the deal cedes control of the firm, which operates 42 channels and generates revenues of around $500M, it will allow it grow and take advantage of the Reliance firepower.
Viacom CFO Wade Davis said: “We did this deal to set the company up for its next wave of growth by more closely aligning with our partner’s affiliated Jio platform, one of the largest and fastest growing mobile, broadband and video distribution platforms in India, having grown to 160 million subs in just over a year since launch. This is fantastic for Viacom18 and for Viacom since we retain a 49% stake. We’re very excited about the road ahead.”
Elsewhere, it has busy on the distribution front, most recently striking a deal with mobile operator Telefonica to roll out live feeds of MTV, Nickelodeon, Nick Junior, Comedy Central and the Paramount channel across Latin America. Bakish called it a “first of its kind” deal.
“This is a critical first step… bringing a new product to new distributors on a global basis. As we’ve said before, we believe mobile is a big opportunity globally and we’re focused on quickly unlocking it.”
On the other side, CBS has been focusing on selling its network series, such as long-running titles including Hawaii Five-O and NCIS and new shows including David Boreanaz’s Seal Team and CIA thriller Instinct, starring The Good Wife’s Alan Cumming, to broadcasters around the world. It also sells Showtime series such as Twin Peaks and I’m Dying Up Here to individual broadcasters, while CBS Distribution Chief Executive Armando Nunez Jr’s team has also struck a number of wide-ranging output deal to the likes of Sky in Europe.
CBS Chief Executive Les Moonves has regularly said that the international sale of shows such as Star Trek: Discovery, commissioned by CBS All Access and subsequently sold to Netflix for the rest of the world, makes the company’s 65-70 owned shows profitable from the start. It is also looking to roll out the SVOD service globally, beginning with Canada and Australia.
“All Access has grown into a remarkably powerful platform for us, and we’re now gearing up to scale the service in a whole new way overseas. We have seen the success the other streaming services have had globally, and we think this is fertile ground for All Access too,” he said in November.
The Australian move comes after it paid $197M to acquire Network Ten. The move will ramp up the competition with rival terrestrials including Nine Network and Network Seven and will “pave the way for further multiplatform distribution opportunities for CBS content”, according to Moonves.
“In addition to owning one of the big three broadcasters in Australia, this acquisition will also give us control over our content across all forms of distribution in that market. So we will combine the reach of a major television network with an emerging streaming service playing right into our expertise,” he added.
The Network Ten deal is also CBS’ first major move in owning channels outside of the U.S., although it does already operate a joint venture with AMC Networks International that houses channels such as CBS Reality, CBS Action, CBS Drama, which had their best ever year in the UK in 2017.
Given Viacom’s interest in collaborating between the likes of Paramount Network, Channel 5 and Telefe, adding Network Ten to the gang would give a combined firm even more international firepower to commission high-end scripted content.
The two would also likely, at some stage, bring together CBS Studios International, which has a library of around 70,000 hours of programming, and Viacom International Media Networks Programme Sales Group, which sells shows such as Nickelodeon’s Knight Squad and formats including Jersey Shore.
One of the challenges the two companies will have to face will be agreeing on the value of both businesses, something that is thought to have impeded merger talks in 2016. Some analysts believing that Viacom’s global business has been an “underappreciated asset” when it comes to super-scale mergers.
“Viacom’s international networks have had very healthy growth, partially driven by Telefe recently. Furthermore, we believe there could be upside to both advertising, recently improving UK ad market, and affiliate revenues, renewals across the portfolio of networks and view Viacom’s international networks business as an underappreciated asset at the company,” noted investment bank JP Morgan.
International will play an even greater role this time around with a map of the world, and their various businesses, likely to be studied over the next few weeks as the two companies’ special merger committees consider a deal.