ViacomCBS Leaders Talk M&A, ‘Green Shoots’ in Ad Sales and Streaming at Annual Meeting

Cynthia Littleton
·5 min read

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ViacomCBS president and CEO Bob Bakish told investors on Monday that the company feels no urgency to pursue any major acquisitions at present.

During ViacomCBS’ 40-minute annual meeting of shareholders, Bakish also said the TV giant is starting to see “green shoots” in the scatter advertising marketplace. And he talked up the growth in usage of the newly combined Viacom and CBS Corp. streaming platforms and promised that a major overhaul of the CBS All Access subscription platform is coming to incorporate more ViacomCBS brands.

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On the subject of M&A, Bakish was clear. “There are no must-have assets out there for us in the landscape,” Bakish said, promising to be both “highly disciplined and highly opportunistic” in evaluating options that might arise.

“You should not expect us to do material deals in the current environment,” he said.

Shari Redstone, non-executive chairman of ViacomCBS, vociferously reiterated her support for Bakish and the management team that has been solidified in the five months since the merger closed in early December. ViacomCBS shares had already been battered in 2018 and 2019 by corporate turmoil, and then the COVID-19 shock sent the price plummeting further.

“We totally believe the stock is dramatically undervalued,” Redstone said during the Q&A session of the meeting, which was held remotely via webcast given the coronavirus lockdown. “The market is looking for us to prove that we can execute on our strategy. I’m confident we will do so more quickly than anyone expects.”

ViacomCBS shares were up 7% in early trading Monday to around $18.50 amid a broader rally for major U.S. indices. Shares are down 64% for the year to date. ViacomCBS is not alone in seeing double-digit declines. But the lack of shareholder bellyaching about the stock price during the Q&A portion of the meeting underscores Redstone’s firm control of nearly 80% of the voting rights in ViacomCBS.

Bakish and Redstone reiterated the company’s focus on studios, networks and streaming as outlined last week on the quarterly earnings call. He cited the “milestone growth” in recent weeks for Pluto TV, the ad-supported streaming platform, and CBS All Access.

“Our growing scale, audience reach and earnings power will become even more evident as the market rebounds,” Bakish said. Pluto TV is serving as a “massive free front door” to help funnel paying customers to the subscription CBS All Access and Showtime streaming platforms.

Advertising sales were hammered during the first quarter period by the sudden coronavirus lockdown. National broadcast has held up the best, followed by cable and digital. The weakest numbers are found at the local level among ViacomCBS’ 28 O&O stations, Bakish said.

Bakish said ViacomCBS’ sales corps is seeing improvement in scatter ad sales activity compared to April. “We’re seeing some green shoots in advertising but we continue to need to manage through it,” he said.

Bakish repeatedly emphasized that the combination of Viacom and CBS Corp. is helping the company compete with its larger rivals as it has more to offer key constituencies such as ad buyers and MVPDs.

“One of our largest clients recently came to market with Q2 scatter dollars. We know we got the largest share,” Bakish said.

Among other highlights from the meeting:

** ViacomCBS’ annual content spending bill of $13 billion “puts us in a very small club,” Bakish said. The company is in the process of scrutinizing that content tab and looking to “fund that investment growth by shifting dollars from lower-growth sectors,” he said.

** The addition of 120 film titles from the Paramount Pictures library to the CBS All Access offering has already yielded “significant increases in engagement” among All Access subscribers. A user-interface overhaul is coming to CBS All Access this summer, followed later by a “transformative rebrand and relaunch” of the pay service, Bakish said.

** Bakish talked up ViacomCBS’ long-term relationship with the NFL in response to a question about whether the price tag for a new NFL rights deal may spiral beyond the realm of profitability for the company. The CEO pointed to a recent pact with the NFL that gives CBS an extra wildcard playoff game to carry on broadcast TV and CBS All Access in the coming NFL season, as well as the agreement to produce a special broadcast of the game aimed for kids that will air on Nickelodeon. “That’s an example of the kind of things we can do to create incremental value for the NFL,” he said.

** Redstone made a brief mention of the company starting to “contemplate return to work scenarios” for employees but did not elaborate, nor were there questions from shareholders about a timetable.

** Redstone opened the meeting with a tribute to longtime Simon & Schuster CEO Carolyn Reidy, who died May 12 of a heart attack at age 71. “She led with strength, kindness and humor and will be missed by all who knew her,” Redstone said.

(Pictured: Shari Redstone)

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