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Is June the Month for a Viacom-CBS Deal?

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Viacom-CBS merger talks could resume soon

Viacom (VIAB) and CBS (CBS) are preparing to reopen merger talks this month, according to a CNBC report citing sources familiar with the matter. An attempt to merge the companies last year flopped, mostly because CBS drew a leadership lineup for the combined company that excluded Viacom executives.

The rise of cord-cutting is pushing traditional media companies to rethink their business strategies. The media industry has witnessed a number of megadeals in recent times as players respond to the shrinking traditional pay-TV market and a rise of digital video consumption. Walt Disney (DIS) spent $71.3 billion to purchase a package of entertainment assets from Fox (FOX). Disney is now gearing up to launch its own digital subscription video in November.

AT&T bought WarnerMedia for $85.4 billion last year to strengthen its media business, and it is now working on a new streaming video service expected to launch in the coming months. Comcast (CMCSA) bought European broadcaster Sky and is now preparing to enter the streaming video market next year.

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Americans are ditching traditional pay-TV subscription

According to eMarketer estimates, 33 million Americans had abandoned traditional pay-TV subscriptions or cut the cord as of the end of 2018. By 2022, America is projected to have over 55 million cord-cutters. Since Viacom and CBS have also been affected by cord-cutting, there is a view that merging their operations would allow them to tap into each other’s strength and build a more powerful media force to better respond to the changing media landscape.

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