Viacom, CBS deal cuts out the small player

OUTLOOK

Obvious move to facilitate promotion, add bundling

September 12, 1999|By M. William Salganik

IT WAS, LITERALLY, a Blockbuster deal. Viacom Inc.'s proposed acquisition of CBS Corp. for $34.9 billion will create a company controlling key names in nearly every entertainment field: CBS, Showtime, MTV, the Nashville Network, Nickelodeon, Paramount, Simon & Schuster, VH1 -- and Blockbuster. Does it make sense as a deal? What does it mean for the industries?

Bruce Leichtman

Director, media and entertainment strategies, the Yankee Group

The key word would be "synergy." These two companies really complement each other very well. Where CBS had holes -- or opportunities -- Viacom fills them, and vice versa. It's not like just putting two behemoths together to make a larger entity.

They're now in the biggest leagues, with Disney and Time-Warner. What it does is allow them cross-promotion and advertising bundling. Beyond that, there's repurposing of content, like "Beavis and Butthead: The Movie," which was made by Paramount based on an MTV show.

Barry Hyman

Media analyst, Ehrenkrantz King Nussbaum Inc.

The deal between CBC and Viacom creates the next level of what a media company will have to look like. If they hadn't been the first to do this, somebody else would have done it.

Now, there's no room for a small player.

Look at a company like USA Networks, a cable company that owns a lot of television stations. They're not big enough, and they're not small enough. They will have to be an acquirer, or they will be acquired.

This redefines the landscape, it really does.

Kevin Skislock

Media analyst, Laguna Research Partners

You see the word "brilliant" thrown around a little too much these days. In mergers and acquisitions, a lot of people seem to think big equals brilliant, but I don't agree.

The scepter of power in Hollywood has been capital. In the new Hollywood, the scepter of power is going to be creativity.

This wasn't a brilliant deal; it was an obvious deal. It's two old-paradigm entertainment companies getting together in a deal that's smart for little reasons. These guys may have a brilliant deal ahead of them, but this deal is much more significant for the companies involved than it is for the industries.

John Consoli

Senior editor/network television, Media Week

The goal of the ad-buying community is to get the best deal for their client. If they can do that by negotiating separately with each medium -- TV, cable, radio, billboards -- they will. Their clients don't care about one-stop shopping. What's going to motivate them is a discount.

But there has been a hesitancy so far. CBS has tried to sell radio and billboards with television, but they haven't offered significant discounts.

The bottom line is that these package deals are not big draws for ad dollars so far.

Gene Kimmelman

Co-director, Washington office, Consumers Union

It's always sad to see companies combine that otherwise compete against each other in media and communications.

While this is a time that channel capacity is expanding and new services are being offered on the Internet, we find fewer and fewer entrepreneurs controlling more and more broadcast, cable and Internet services.

That concentration of ownership diminishes the public's opportunity to receive competitive choices in everything from entertainment to news.

Anyone can speak, but who gets heard the most?

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