Ad Buyers Are Bullish on Possible Viacom-CBS Reunion
September 30 2016 - 11:38AM
Dow Jones News
By Alexandra Bruell
As Viacom Inc. and CBS Corp. explore a merger that would reunite
the two media companies after more than a decade, media buyers who
control a large portion of their ad revenues are offering their
nods of approval. They envision complementary audiences, ad
products and possible discounts for bulk buys across multiple
clients.
Media-buying executives see the potential union as a
one-stop-shop where they'd be able to buy ads targeting young
viewers on Viacom cable brands like MTV and Comedy Central, and ads
aimed at older audiences on broadcast juggernaut CBS. The ability
to commit ad dollars to one larger unified group instead of two
separate groups could lead to increased commitments and ultimately
cost efficiencies, several buyers said.
"From a buyer's perspective it creates healthy competition in
the marketplace and gives us a great deal more fluidity across a
diverse set of assets," as well as more "compelling packages," said
David Cohen, president of Interpublic Group of Cos.' Magna
media-buying unit in North America. "Viacom is the scrappy kid in
the playground willing to try anything once and CBS is the tried
and true elder statesman. The juxtaposition of these two is
actually quite exciting and something I'd very much like to
see."
National Amusements Inc., which holds nearly 80% voting stakes
in CBS and Viacom, on Thursday called for the companies' boards to
explore a reunion. In a letter to the boards, National Amusements
said it believed a merger could "allow the combined company to
respond even more aggressively and effectively to the challenges of
the changing entertainment and media landscape."
While ad buyers expressed optimism, a merger won't make Viacom's
stark challenges go away, especially the ratings challenges at many
of its channels. While the company was once regarded as the go-to
place on the cable dial to attract young viewers, it has struggled
to maintain that identity as cord-cutting and cord-shaving chip
away at its audience.
Nevertheless, there are promising advertising synergies. A
reunion could allow the combined company to sell its broadcast and
cable networks as a package in the "upfront" ad marketplace, when
marketers commit to buying large amounts of inventory for the year.
That's the approach of Comcast Corp.'s NBCUniversal and 21st
Century Fox, for example.
"It creates a direct competitor to NBCU like tomorrow," said one
buyer. "If we're trying to negotiate a two billion-dollar deal with
a group, it's easier for us to do business with NBCU because they
have such a wide depth and breadth. CBS and Viacom don't have that
breadth."
With a joint offering, combined with better data that proves the
ads work across more clients, "naturally we'd spend more," added
another ad buyer.
"The prospect of these two powerhouses reuniting opens up the
possibility of new cross-platform media buys that tap into their
great brands and programming." said Christina Norman, CEO of Media
Storm, a media agency that supports CBS Sports and Viacom's Logo
and CMT networks. Ms. Norman was a former president of Viacom's
MTV.
Viacom also brings "data acumen" to CBS, he said. Viacom this
May rolled out a product that uses American Express purchase data
to help advertisers target consumers close to a point of sale. Most
networks, including Viacom, have begun experimenting with
technology that supports more sophisticated and automated
ad-targeting, said another buyer.
There are some other potential benefits of a merger. Viacom
could bring CBS international reach, and could potentially supply
programming for CBS's subscription streaming service, CBS All
Access. And the same scale that provides leverage with ad buyers
will help the company in negotiations with pay TV providers. Plus,
there are obvious cost savings.
Ad buyers said Viacom could benefit from the oversight of CBS
Chief Les Moonves, whose close relationship with the Redstone
empire's new mogul, Shari Redstone, has him poised to become CEO in
the event of a merger.
"Les is a great monetizer of programming," said one ad buyer.
"There's no doubt [Viacom's] product could benefit from a new
leader."
Write to Alexandra Bruell at alexandra.bruell@wsj.com
(END) Dow Jones Newswires
September 30, 2016 11:23 ET (15:23 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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