Viacom Buys CBS

Posted on September 8, 1999

Viacom Inc.'s recent announcement to purchase CBS Corporation, will create a new organization with capitalization in excess of $80 billion, as well as revolutionize the future of broadcasting, according to Cahners In-Stat Group, a high tech market research firm. The deal gives Viacom, owner of Paramount Pictures, MTV, Comedy Central, Paramount Pictures, Blockbuster Video, among others, access to one of the largest collections of U.S. radio stations.

"The underlying synergy of the Viacom/CBS deal is that it brings a global, cable TV programming powerhouse much-needed new content to add to its programming arm, along with new over-the-airwaves outlets for its premium cable TV content," says Gerry Kaufhold, principal analyst for Cahners In-Stat Group's multimedia service. "It's a marriage made in media investment heaven."

Cahners In-Stat Group also believes:

Pay-per-view from local digital TV could devastate cable - If a small number of local digital terrestrial broadcasters decide to offer a few targeted sports and pay-per-view movie channels, TV viewers could disconnect from their cable system and choose from a Chinese menu of specific networks. In return they would pay much less than today's basic cable TV services cost.
CBS will save the ailing UPN - Never before in history has a number one TV network actually merged with a struggling number five "wanna be." The buyout results in a combined entity that has viewers in about 25% of all U.S. television households on a daily basis. Cahners In-Stat Group believes that there will be some melding of programs between CBS and UPN. The CBS network's mid-season schedule re-shuffling for January 2000 is likely to include at least a handful of youth-oriented programs from the UPN portfolio.
DTV will put Showtime and MTV on the air waves - The combination of Viacom's hot cable TV networks with CBS' 30 owned and operated TV stations will present some radical new profit opportunities in the age of digital broadcasting. By using the multicast capabilities of digital broadcasts, affiliates of the CBS network will be able to start selling pay-per-view movies from Showtime, or reap monthly subscription fees to permit digital TV viewers to tune in MTV, VH-1 or Nickelodeon.
MTV will become the number one programmer for radio - The merger also provides Viacom's MTV franchise with a home run. Viacom will be able to revamp CBS's radio stations to act as promotional arms for MTV. The marriage of MTV programming with local radio distribution will put Viacom in a position to decide what's popular and what's not.