CBS For Sale?

Broadcast is big business.  Comcast completed its full ownership of NBC from General Electric earlier this year, while Disney acquired ABC many years ago from CapCities.  Now comes word that CBS, part of Sumner Redstone's empire could be for sale with the likely buyer being Time Warner, Inc.  "Gabelli & Co. said buying the most-watched broadcast network would give Time Warner, owner of cable channels such as CNN and TNT, more negotiating leverage to win higher fees from pay-television systems that carry its programming."  In a world of aggregating and leveraging content to aid license deals, such a move makes sense.  Why Viacom split from CBS in the first place was always a head scratcher.  Could Viacom become another takeover target?

In the recent NCAA Basketball Championship, CBS and Turner (a division of TW) seemed to work quite well together, promoting each other's games.  Having a broadcast partner in CBS would bring great internal partnerships.  "Their strengths are complementary -- Time Warner runs Hollywood’s most-prolific studio and CBS has the highest broadcast TV ratings -- and both plan asset sales to focus on those areas."  Whether Sumner is ready to let go of CBS, like Ted Turner did many years ago when he sold his Turner empire to TW, remains to be seen.  But the timing seems right for both parties to come together.

Streaming Subscriptions Embraced By Higher Income Households

Perhaps not all streaming subscriptions lead to cord cutting.  it might just be that in some households, cable subscriptions and streaming subscriptions like Netflix, Hulu Plus, Redbox, Amazon Prime, and others can live side by side.  While the Nielsen research cited doesn't delve into that question, it suggests that price may not be an issue when it comes to getting access to more content choices.  "Homes with incomes of over $100,000 made up 37% of all U.S. homes with a streaming subscription service and were 85% more likely to subscribe than the general population."  The study also cites that "Homes with tablets also significantly over index and are 66% more likely to have the services."  It might be reasonable to suggest that higher income households are more likely to own tablets, perhaps even higher number of tablets in their home than lower income homes.  The demand for content to play on these devices might then lead to these same households purchasing more streaming subscriptions to satisfy that need.

For lower income households, cord cutting and cord shaving might indeed lead to streaming subscriptions replacing their cable subscriptions, not augmenting their selection.  The rise of tablets in the home will certainly continue to impact this these studies and perhaps further distinguish the haves from the have nots.  At the end of the day, income will still be a key decider in whether households take both cable and streaming subscriptions or ends up dropping one service for another.