August 28, 2020
ViacomCBS more than most media giants has aggressively licensed Paramount Pictures and related content to third-party distributors such as Netflix and NBCUniversal’s Peacock, among others, driven in part by the coronavirus pandemic. The strategy has led some Wall Street analysts to question how generating short-term revenue helps ViacomCBS’s plan to launch a global subscription streaming video platform in 2021.
Steven Cahall, media analyst with Wells Fargo Securities, contends ViacomCBS is shooting itself in the foot licensing content to media rivals instead of hoarding content for proprietary brands Pluto TV, CBS All Access and Showtime.
In the most-recent fiscal report, CEO Bob Bakish disclosed the company’s pending “house of brands” streaming platform designed to expand the global reach of CBS All Access.
“We’re accelerating our plans for an expanded subscription service, building off CBS All Access, with major changes coming this summer, as we track towards the rebrand and relaunch of a transformed product,” Bakish said in May.
In meantime, Cahall would like to see the company stop licensing away content better saved for its own over-the-top video platforms.
“We want to see [ViacomCBS] cease licensing marquee Paramount and Showtime content to competitors and stop feeding services like Netflix with originals,” Cahall wrote in a Aug. 27 note. “Our [stock] upgrade contemplates [the company] using divestiture cash to wean itself from licensing.”
Cahall suggests consolidating content could help increase combined subscribers to CBS All Access, Showtime, Noggin and BET+ to 26.6 million by 2026 from 11.2 million in 2019. Total SVOD revenue would skyrocket to $1.5 billion in 2025 from $779 million last year.
The analyst says the new “house of brands” service should retail from $10-$15 monthly — the latter comparable to HBO Max.
‘[The] closer [the price is] to $15 then the launch may be less enticing for consumers,” Cahall wrote.