UBS reveals the combined company that could challenge Disney and Netflix in the "arms race for content" (DIS, NFLX, CBS, VIAB)


the Big Bang theoryCBS

  • A combination of CBS and Viacom could have the resources to compete with Netflix and Disney in the battle to build the largest and best content portfolio, according to new UBS research.
  • The company's merger would spend about $ 13 billion a year on content production, lagging behind only with Netflix and Disney, an analyst team led by John C. Hodulik said in the note.
  • CBS and Viacom have returned to the discussions on mergers in the last few months after the agreement had been attempted several times in recent years.
  • Visit the Markets Insider homepage for more stories.

Netflix and Disney spend more than any other company to produce countless TV shows and films every year.

But the proposed merger between CBS and Viacom could result in a formidable content competitor – one with the size and resources to compete with those two media juggernaut, according to a new UBS report.

CBS – which produces hit shows like "Big Bang Theory" and "Survivor" – and Viacom – which runs channels like Comedy Central and Nickelodeon – would spend around $ 13 billion a year on content production as a combined company.

By comparison, Netflix spent more than $ 12 billion on content last year and this number is expected to exceed $ 15 billion in 2019, according to Variety.

Markets Insider is looking for a panel of millenary investors. If you are active in the markets, CLICK HERE to register.

"While the DTC strategies of the respective companies have been different in some ways, we see many opportunities for the combined company to be in a stronger position in DTC," Hodulik said in the note.

The report also pointed out that the viacom content portfolio of cable channels and Paramount – a film studio that produced "The Godfather" and the movie franchise "Indiana Jones" – could help diversify content on the streaming product directed by CBS consumer, CBS All Access.

A merger between CBS and Viacom has been suspended and attempted several times in recent years. Last year, the two media giants approached the merger, but the deal fell apart due to management problems with Les Moonves, CBS's current general manager, who in later renounced the allegations of sexual misconduct.

As the companies return to the table to discuss the agreement once again, the boards of CBS and Viacom have chosen August 8 – the same day that both companies report second-quarter earnings – in as the deadline for reaching an agreement on the merger, according to CNBC.

Some of the remaining obstacles include prices and who would be included in the management team to manage the new company.