In a keynote session Monday at the UBS Technology, Media and Telecom Conference, ViacomCBS CEO Bob Bakish emphasized the synergy starting to kick in after last week’s close of the company’s long-awaited merger.
Offering “a taste” of synergy plans, Bakish reeled off several examples. Among them: The Late Late Show on CBS with James Corden will re-air the following day on Viacom’s Comedy Central; wraparound programming on Viacom networks will accompany the CBS broadcast of the Grammy Awards in February; and Paramount Pictures recently licensing titles to both CBS All Access and Showtime.
“There are so many angles to this story,” Bakish said.
Despite the potential upside for a company now worth about $25 billion, Bakish said the company’s stock price is “categorically undervalued.” At a bit less than $40 a share, it trades at about six times earnings, which is one of the lowest multiples of any company in the S&P 500.
“You will see us make financial moves,” Bakish said. He mentioned a $2 billion stock buyback program and selling off of some non-core assets, primarily real estate. (The fabled headquarters of CBS, the building known as Black Rock, will be divested, Bakish said.)
As to the notion that ViacomCBS will likely look for continued scale by acquiring a company MGM or Lionsgate, Bakish said, “There’s a lot of noise about this. We don’t see any asset on the market or coming to market in the near term that we have to own. Will we look? Of course we’ll look.”
Bakish was asked by moderator and UBS analyst John Hodulik about how the company stacks up with media peers rolling out significant new streaming services. He emphasized key differences between CBS All Access and other subscription offerings, chiefly its ability to deliver live, local programming and sports. Pluto TV, which Viacom acquired for $340 million in January 2019, is another important streaming asset given that it is free to consumers, deriving its revenue from advertising.
Total viewing on Pluto is growing more quickly than the number of monthly active users, Bakish said. He did not disclose a viewing number, but Viacom last month said Pluto has reached 20 million monthly active users just nine months after the acquisition. Bakish said if a deal for Pluto happened today, it would be for a “significantly higher” valuation.
On the NFL, whose deals are up after the 2022 season, Bakish said he feels the NFL has “a great deal of faith in CBS” and its ability to deliver high-quality broadcasts. “It’s not easy to replicate,” he said. “Will it be competitive? Yeah, sure it will be, but this is something that probably gets done way sooner than ’23.”
Viacom’s international reach, Bakish said, helps the CBS cause because the NFL is keen to keep expanding its game around the world. The league has held regular-season games in Mexico, Canada and the UK in recent seasons.
As far as carriage, the CEO said the fact that about one-third of ViacomCBS’ distribution deals are up for renewal in 2020 is “a good thing” for the company. “That allows us to improve the power ratio of fees to audience share.” The lack of sync in the terms of certain Viacom and CBS network deals will need to be “worked through,” Bakish acknowledged. But additional scale from the merger should help all units, he said. Two virtual MVPD renewals for CBS in 2020, for example, are with operators which don’t currently carry Viacom networks, which represents a chance for Viacom to gain subscribers.
Even if the company doesn’t manage to reverse the tide and add households by the millions, it still has managed to make its relationships with distributors more healthy. “There’s just no question in my mind that we’re in a very good place,” he said.
When Bakish took the reins as CEO in late-2015, frayed trust with distributors was a major issue following years of neglect under ex-CEO Philippe Dauman, onetime protégé of former Viacom and CBS chairman Sumner Redstone. With Dauman trying to force through rate increases even as ratings continued to erode, there were major blackouts with distributors like Suddenlink, on whose systems Viacom networks were dark for three years.
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