Saturday, April 25, 2020

ViacomCBS, Verizon Strike Multiyear Carriage Deal

The multiyear deal covers the full range of ViacomCBS' networks and retransmission consent for CBS-owned TV stations.

ViacomCBS and telecom giant Verizon's FiOS have struck a new carriage agreement, the second major pact for the entertainment giant since the recombination of Viacom and CBS closed in December.

The companies didn't make a formal announcement, but sources confirmed the agreement to The Hollywood Reporter.

In January, ViacomCBS struck a new carriage deal with Comcast that covered Viacom networks and made sure Comcast's agreements with the CBS and Viacom portfolios now end at the same time. The Verizon pact is the first one that covers the complete ViacomCBS portfolio.

Financial terms weren't disclosed, but the multiyear deal covers the full range of ViacomCBS' networks, which include CBS, CBS Sports Network, Nickelodeon, Showtime, MTV, BET, Comedy Central and the Paramount Network. The deal also covers retransmission consent for CBS-owned TV stations.

ViacomCBS CEO Bob Bakish has focused on a positive, collaborative approach to carriage deals compared to his Viacom predecessors' approach, but Wall Street has continued to wonder whether the merged firm would be able to strike new carriage agreements.

Bakish in a November analyst call pointed to the recombined group controlling around 22 percent of primetime TV viewing in the U.S. via CBS and Viacom's cable assets, while only getting around 11 percent of affiliate fees.

"Part of the bear thesis has been that the networks would be dropped upon renewals with distribution partners," Wolfe Research analyst John Janedis wrote in a first reaction. "With FiOS done, we expect the market to focus on a long-awaited virtual [pay TV] deal and Dish, which should take some of the pressure off the stock."

He added: "We believe the term is in the four-year range, likely co-terminus given the importance management has spoken to related to synchronizing deals post the merger." That means ViacomCBS has been targeting to reach new carriage deals that cover Viacom and CBS networks for the same periods.

Janedis also took a stab at other deal terms, writing in a report: "While pricing of the deal wasn't disclosed, we doubt ViacomCBS would have accepted terms (without going dark) that included a rate rollback. We assume [the] combined Viacom/CBS nets rate will increase at a compound annual growth rate in the mid-single digit range over the life of the deal. Although unclear, we do not believe any of the ViacomCBS nets will be re-tiered as a result of the renewal."

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