In a high-energy appearance at the Paley Center, CBS and Viacom vice chair Shari Redstone made the case for companies’ impending merger, insisting “we absolutely have enough scale.”
The stocks of Viacom and CBS, which are controlled by National Amusements, have slumped since the long-awaited merger was announced in August. Asked by moderator Aryeh Bourkoff of LionTree about skepticism in the market about ViacomCBS, which centers on whether it can compete against much larger media and tech firms, Redstone delivered a fiery argument.
“We absolutely have enough scale,” she said. People make a mistake and they look at scale as being about market cap. Scale is not about market cap. Scale is about the ability to create the quality and quantity of content that people want to see. When you look at Viacom and CBS combined together, we have an incredible library. We have incredible IP. We spend over $13 billion on content. We can compete with the best of them.”
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After she was done making her point, Bourkoff dryly replied, “I didn’t mean to offend you with the question,” drawing laughs from the audience. “Skepticism is very motivating,” Redstone said.
The remarks at Paley’s International Council Summit were some of the first public comments Redstone has offered since the deal finally was completed.
Redstone, who took the reins of National Amusements after a turbulent sequence of events spanning this entire decade, said she is savoring the end result of the saga. “I have been fighting for this for years and years,” she added. “We will be a market leaders sooner than anyone expects.”
When Bourkoff asked about the looming NFL rights renewal facing CBS and other broadcast networks in 2022, Redstone said she’s “super-psyched” about it and “can’t imagine” NFL games no longer airing on CBS. “We have a lot of the same goals that they have,” Redstone said, notably drawing young fans and exploring international markets. “It’s the core of who we are, and I think the NFL recognizes that,” she added. “The package is going to be comprehensive and great. … It won’t be easy [to negotiate], but I think we’re going to get there.”
Redstone also addressed the efforts to remake the cultures of both Viacom and CBS, each of which has weathered major storms over the years.
“These companies were together in the past,” she said, alluding to the period of 2000 to 2006, “but never like this; we are truly going to be one culture, one set of values, one strategy, and one team.”
The companies individually “have made tremendous progress” in regrouping since their respective issues, she continued. “Creating a culture where people come together and work together is really important.”
Viacom has drawn some scrutiny this week for striking rights deals with Netflix for Nickelodeon programming and Paramount Pictures’ Beverly Hills Cop. Redstone strongly asserted the viability of selective licensing as a strategy. The latest deals came on the eve of Viacom joining with CBS, which has pursued a more subscription-based streaming strategy in which the name of the game is to own and control content, not license it to third parties.
About 20% to 25% of Netflix content can be sourced to ViacomCBS, she asserted. “The more we can bring our content everywhere, the more we can grow the whole and the sum of the parts,” she said. “We’re very comfortable with our strategy of creating content for our own platforms and for creating content for third-party platforms,” she said.
In the case of Nickelodeon, Redstone said, the brand reaches about 40% of viewers aged 2 to 11. “That’s more than anyone else,” Redstone said. “But guess what? There’s 60% of the market we’re not reaching. So if we create differentiated content, maybe put some of our library content on Netflix, maybe create different movies for them, we’re going to drive [viewers] back to our digital and video platforms, we’re going to drive them to what we might do at the studio, we’re going to drive them to our consumer products.” The strategy, she added, “is the best way to maximize the value of our content and grow our brands around the world.”
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