UBS reveals the combined company that could challenge Disney and Netflix in the 'content arms race'
- A combination of CBS and Viacom could have the resources needed to compete with Netflix and Disney in the battle to build the biggest and best content portfolio, according to new research from UBS.
- The merged company would spend around $13 billion a year on content production, falling behind only Netflix and Disney, a team of analysts led by John C. Hodulik said in the note.
- CBS and Viacom have returned to merger discussions in recent months after the deal had been attempted several times over the last few years.
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CBS and Viacom could result in a formidable content competitor - one with the scale and resources to rival those two media juggernauts, according to a new report from UBS.
By comparison, Netflix spent more than $12 billion on content last year, and that number is expected to jump above $15 billion in 2019, according to Variety.Markets Insider is looking for a panel of millennial investors. If you're active in the markets, CLICK HERE to sign up.
"While the respective companies' DTC strategies have differed in some ways we see plenty of opportunity for the combined company to be in a stronger position in DTC," Hodulik said in the note.The report also pointed out how Viacom's content portfolio of cable channels and Paramount - a movie studio that produced "The Godfather" and the "Indiana Jones" movie franchise - could help diversify the content on CBS's direct-to-consumer streaming product, CBS All Access. A merger between CBS and Viacom has been floated and attempted several times over the last few years. Last year, the two media giants came close to merging but the deal fell apart because of management issues with Les Moonves, the chief executive officer of CBS at the time who later stepped down over sexual misconduct allegations.
As the companies return to the table to discuss the deal once again, the boards of CBS and Viacom have chosen August 8 - the same day both companies report second quarter earnings - as the deadline to come to an agreement over the merger, according to CNBC.
Some of the remaining hurdles include pricing and who would be included in the management team to run the new company.
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