Suddenly, There's Pressure on ViacomCBS and NBCUniversal

Now that AT&T has decided to separate WarnerMedia and merge with Discovery, the rest of the media world — particularly the smaller players — face new pressure to make their countermoves, according to CNBC.

Even before this deal, it was clear that Lionsgate, MGM, Sony Pictures and AMC Networks were probably too small to compete in a streaming world where success depends on a massive store of content and global reach.

But ViacomCBS and Comcast’s NBCUniversal are much bigger, and probably assumed they had some time — at least a year — to see how many subscribers signed up for their streaming offerings, Paramount+ and Peacock.

Under pressure:

Suddenly, both ViacomCBS and NBCUniversal seem subscale as they attempt to put together global streaming services. They aren’t trying to be niche players, such as Starz or AMC+.

That means both will need more content to compete against Netflix, Amazon Prime Video, Disney and whatever the new name of WarnerMediaDiscovery will be.

The obvious move would be for ViacomCBS and NBCUniversal to merge. But a combined ViacomCBS/NBCUniversal would have two U.S. broadcast networks — CBS and NBC — housed under the same corporate roof. That won’t fly with U.S. regulators. While the parent companies could theoretically spin out or sell them, the broadcast networks provide so much value to both companies — and their streaming services — that it seems unlikely.

That leaves Comcast and ViacomCBS with four likely options:

1. Buy. If both companies feel their streaming services can compete around the world, they can go on global and domestic acquisition sprees. It may take several deals to get to a scaled position, as they piece together smaller U.S.-based assets and larger global media companies in Latin America and Europe.

2. Sell. They could also sell. Redstone is more open to the idea of selling ViacomCBS than her late father, Sumner Redstone, the former chairman, was, according to people familiar with the matter. It’s unclear if Roberts would consider selling NBCUniversal. Potential buyers could include Amazon or the newly merged WarnerMedia-Discovery. Apple and Netflix continue to hover along the periphery, but neither company has ever shown much interest in making big media acquisitions.

3. Reduce their ambitions. The third option is to throw in the towel on being a global streaming service. Instead, NBCUniversal and ViacomCBS could license their content to other, larger streamers and wind down Paramount+ and Peacock if they fail to gain global traction.

4. Bundle. Option four is similar but less drastic. ViacomCBS and NBCUniversal could begin bundling their streaming services together or finding new streaming partners to increase global distribution through discounted offerings. The main problem with this strategy is it limits the upside for both companies, who won’t be able to compete with larger players for top content and breadth of programming.