CBS & Viacom Explore Merger Again

The news on Wednesday that CBS and Viacom were once again exploring a merger opportunity should come as no surprise given that the same person, Shari Redstone, is “running the show” at both corporations because her father, who is the chairman of CBS is very ill.

The potential merger is being driven by a strategy to get ahead of the likely merger of AT&T and Time Warner which would create an enormous media conglomerate. The recent merger that is likely to meet full approval between Disney and FOX is another reason for CBS and Viacom to view each other as a potential “port in the storm” scenario.

The combination of the two entities would combine television/media content creation and broadcasting with the expertise Viacom has in distribution of that content. The ability to have expertise in both areas is becoming a necessity in the mainstream media in order to be able to negotiate profitable distribution agreements.

Furthermore, the synergy of content creation/broadcasting and distribution is becoming crucial for the smaller players in the industry to be able to stay relevant with the competition from Disney/FOX and AT&T – Time Warner (AT&T also owns DirecTV).

This is especially relevant when you consider that AT&T has a market cap of over $200 billion and CBS has a market cap of $23 billion. In the event that AT&T merges with Time Warner that number could be close to $300 billion. The Disney and FOX deal will put that combined corporation at around $250 billion in market cap.
The CBS – Viacom deal might become a necessary move to ensure their own survival in the changing media landscape. The distribution of content is critical, and control of content is also an integral part of the connection between content and profitability. The two companies have several areas of cross-compatibility which is suitable for a merger opportunity.

The merger, if approved, would potentially bring together a more robust stable of networks that are widely available on basic cable packages that would provide leverage for CBS & Viacom when negotiating the carriage fee agreements.

This same principle would apply outside of the U.S. domestic market where a combined entity would be a serious player in the international media / television broadcasting space. My own depth of knowledge is not in the international market but plenty of coverage is out there on that area of this potential deal.

The streaming service that CBS operates called CBS All Access would gain a significant increase in content by merging with Viacom. CBS would also obtain the control of the Viacom owned Paramount movie studio, which should be noted is struggling at this point.

Wall Street is not keen on this deal, according to Forbes they do not see the synergies or the market caps of the combined entity being significant enough to make a difference in the media industry at this point. It also notes, as other major financial news outlets have noted, that CBS is a ripe target for being obtained themselves by Verizon.

The Verizon-CBS rumor has been long running now and it remains to be seen if Verizon wants to take that strategic dive into the network television arm of the industry. The resources of Verizon would be a significant deal within the media industry that would create some serious ripple effect.
However, for now, at least for the next few weeks the focus will remain on CBS and Viacom and if they can determine the parameters of a deal. The combination will not reshape their industry segment but it will have an impact on the way content is controlled and distributed. In that sense, this deal is significant because with the meteoric rise in streaming television programs, content rights are king. CBS would hold the keys to some important properties. Stay tuned.

(some background provided by CNBC, Recode, Forbes, CNN

Fear Factor: The Depressing Nature of the News Cycle

The mainstream news media has motivated viewership through fear for a long time now. Those who took any communications courses in college like I did could tell you that the fear driven news cycle is mass media 101 methodology. However, lately I have observed that it is getting worse, the constant litany of news stories consisting of nothing but tragedy, war, violence, murder, and disasters of all types is becoming increasingly common.


The once tried and true strategy of using fear as the motivator for the viewership ratings of news broadcasts and on-line “click counts” may be backfiring. In my own experience I have overheard others discussing the “depressing” nature of the news cycle. I have also been told directly by friends, colleagues, family members, and other associates that the news is “too sad or too upsetting” to watch with regularity.


The fast paced nature of our social media driven society and the plethora of entertainment options as well as the numerous methods we can obtain news related information has a direct correlation to this change in perception of the traditional news media.


The mainstream news outlets such as CNN, Fox News, and MSNBC have continued to function in the format habit of drilling the same few stories into the minds of the viewer. Several people have commented to me that they are actually depressed or anxious because of the way those outlets have covered stories such as ISIS, Ebola, and the state of the global economy.


In a world that is seemingly coming apart at the seams, the average person is seeking some comfort and hope. In a world where they get news alerts buzzing into their cell phone or flashing on the screens of their laptop or tablet, they do not need to be reminded that there are some evil people, horrible diseases, or discouraging economic data gripping the international community. They are aware of it, and most average people are seeking an escape from it in larger numbers.


Mass Migration


It is this functional imperative to escape the incessant drone of the negative news cycle that has given rise to the phenomenon of viewership ratings spikes for some other trends in television and media such as reality television, competition shows, and sports related programming.


I know people in my own circles that would not fit the mold of the traditional sports viewer, people who at one point in time watched news programs such as 60 Minutes, 20/20, or Dateline but because of the negative and depressing aspects of the news coverage they no longer watch those programs. Instead, they watch only sports on television particularly live sporting events such as the NFL or the NBA games.


It is no wonder why the ratings for live sporting events are off the charts, some of this viewership activity is a direct result from the news media driving the viewer to find other more uplifting programming choices. Most people are seeking a distraction from the problems and drudgery of everyday life, and the news cycle is only serving to be a constant reminder of the harshness and cruelty of our society.


In some of my own journalism work I have received positive feedback for telling stories that raise awareness of an issue, yet provide hope that our society is capable of better behavior. This is lacking in the coverage of the news in the current cycle format utilized by the major outlets. It is no surprise that the cable networks set up for 24 hour news have seen their overall ratings decline. The lone exception to this rule, Fox News, has seen ratings growth, but it should be noted that it is in demographics where people still watch the news. The younger demographics tend to use the internet or social media to find the news that is of interest to them.


Some of those networks, such as CNN, are embracing a trend in television by announcing the introduction of more original series programming than traditional news broadcasts or talk show format programs. The new concept called “The Wonder List” with veteran newscaster Bill Weir is the latest project approved by CNN in a reorganization of the formatting of the network.


Even the major networks (NBC, ABC, and CBS) have seen changes in the ratings for their news broadcasts and news related programming in primetime. It is all about adaptation and what these networks are learning is that in a time where everything is about customization, the mainstream news broadcast lacks the impact it once had over the viewer.


The advent of Twitter, Facebook, and other social media sites as outlets for gathering customized news feeds that are relevant to the individual user have phased out the traditional news broadcast. The networks have to figure out a way to relate to the average viewer, particularly the younger viewer, without losing their “bread and butter” demographic: the viewer over the age of 55.


Custom Fit


The customization of “news feeds” tailored to the unique interests of the individual user have become the new standard for the way we gather information via the internet and social media platforms. This custom fit approach allows for the user also to gain insight into non-mainstream issues or news pieces that feature something that is rare in the mass market news: hope.


Our society needs hope now more than ever before, but the mainstream media seems to have disconnected from that entirely and continues to follow the drumbeat of fear and panic in the stories they cover. The constant reminders of the tyrannical and barbaric behaviors of ISIS or the next potential Ebola case in a big metropolitan area such as New York City, are all too upsetting for most viewers at this point.


In fairness, the major networks do feature human interest stories and other pieces which cover more benign topics. They also lend coverage to stories of empowerment or hope in various segments, but these are the exception and not the rule. The ABC evening news broadcast will achieve this by their “Person of the Week” segment and they deliver in a mass appeal piece called “Made in America” a series about American products manufacturing. The CBS evening news broadcast has uplifting features such as “On the Road” where they highlight the contribution of regular Americans doing extraordinary actions.


In addition, I would be remiss if I did not include the success of NBC Nightly News which is the only evening newscast to grow their audience. It is the most watched news broadcast in the U.S. for the past 10 years, according to Nielsen, and NBC averages 9.3 million viewers which is approximately 1 million more than the second place ABC newscast with David Muir. They obviously have determined a way to connect with some key viewer demographics, but the younger generations still gravitate toward other outlets to find the news that matters to them on an individual basis.


The NBC podcast is a good example of taking a traditional format and placing it into a modern technological delivery system. It has helped NBC connect with segments of the public who are non-traditional TV news viewers. I believe those types of innovations will continue in order for the mainstream news media to keep pace with the fast pace of the internet new feeds, providing information available to the public across several platforms.


Next Page


Even the internet news sources are not immune to this backlash by the public over the fear inciting news coverage on their sites. I have overheard people while in waiting rooms at the doctor, while getting my haircut, or waiting in line at a grocery store checkout line express upset feelings over what appears on the internet news.


However, the internet news coverage is different than a traditional live TV newscast for the obvious reason that the user on the internet can just click onto another link and not read a full news story on the Middle East, Korean tensions, or ISIS violence. I call it the “next page” phenomenon, others have different names for it, but the concept is the same: freedom of choice.


I wrote at one point for a large internet based news platform until they disbanded their freelance news contribution area. This organization used to measure not only the “click count” for a respective news story, but also the amount of time the average reader spent on the page. The goal being to avoid the “next page” scenario with the reader. I was fascinated when I would get the monthly reports to find out which stories held the attention of the reader and which pieces did not.


In the end, the executives in charge of media companies have to understand that the American public is generally tired of the continuous stream of upsetting news flooding our televisions, computers, tablets, and smart phones. I understand that they have to report on what is happening in the world, and that at some points those stories are not easy to see or to read. They would provide themselves and the public some welcome relief if they started to intersperse some stories of hope and perseverance. Those stories are out there, and they are easier to find than it may seem.



(Statistics and ratings courtesy of Nielsen, demographic data courtesy of TVWire, and some background information courtesy of the Associated Press)