×
You will be redirected back to your article in seconds

Analyst: CBS-Sony Pictures merger a good fit for both

Pivotal Research Group report predicts Sony Corp. will sell studio

Sony Corp. may insist its studio division isn’t for sale, but one Wall Street analyst isn’t buying it.

Sony Pictures Entertainment would be better off as part of CBS Corp. than inside the Japanese hardware giant, Pivotal Research Group’s Brian Wieser contended Tuesday.

“It seems difficult to imagine Sony retaining the division in the long run given absence of fit with the rest of Sony’s businesses,” he wrote, citing the struggles at the parent company.

Wieser made an extensive case for Sony to sell off its studio even though the conglom’s CEO, Kazuo Hirai, has repeatedly asserted in recent months that SPE isn’t for sale.

CBS Corp. CEO Leslie Moonves suggested in an interview late last year that his conglom would be open to kicking the tires should the studio be put on the block. Wieser’s analysis was prompted by the Eye’s recent indication that it’s looking to unload some of its outdoor assets.

Wieser identifies numerous synergies across the TV, film and digital sectors that make a CBS-SPE union logical, and he believes there’s an evident mismatch within Sony between its struggling device-centric business and its content arm.

“We believe the Japanese parent company of SPE has never bridged a significant cultural gap with its U.S.-centered operations at SPE,” Wieser wrote. “Our understanding is that the bureaucracy and hierarchical nature of the parent company is significant, and its attempts to impose product and content synergies have been a source of significant distraction.”

There’s plenty more justification for the acquisition from Wieser: The combination of CBS Television Distribution and Sony Pictures Television’s syndication arm, two of the category’s biggest players, would create a behemoth with major clout in the markets for firstrun and off-network programming. That would allow the combined CBS-SPE to dictate even better terms for sales with stations and cable nets going forward.

Overseas expansion is another big reason why Wieser likes a CBS-SPE deal. Sony’s channel holdings in India and Latin America would mesh well with CBS’ more European-skewing assets. A broader global footprint would provide more buyers for CBS programming, which already does a brisk business abroad.

Sony’s international expertise could also be leveraged to take Showtime’s business to the next level. While the premium cabler has grown by leaps and bounds domestically in recent years, it won’t truly catch up to HBO until it can gain traction in overseas markets.

Another benefit for Showtime: The output deal between Sony and Starz, set to expire next year, could be steered to Showtime.

On the digital side, Wieser believes the combined libraries of CBS and Sony could yield bigger dollars from subscription VOD buyers like Netflix and Amazon. He also sees potential benefit for Sony’s multiplatform network Crackle.

While Wieser indicates the TV side of their businesses provide a bigger impetus for the deal than the film side, he doesn’t discount the value of Sony Pictures either, singling out Sony Entertainment CEO Michael Lynton and studio co-chair Amy Pascal as “significant assets” who have persevered under tough conditions.

“That they have been relatively successful despite their parent company’s challenges is a testament to the favorable outcomes we assume would occur under different ownership,” Wieser wrote.

Last but not least, there’s the M&A darling of cost savings through reducing staffing and real estate. CBS has 21,000 employees, SPE 7,000.

Reps for Sony and CBS declined comment.

More TV

  • Natalie Morales, Photo by Catie Laffoon

    'Dead to Me' Season 2 Casts Natalie Morales (EXCLUSIVE)

    Natalie Morales has been cast in “Dead to Me” Season 2 at Netflix, Variety has learned exclusively. Morales will appear in the recurring role of Michelle. Described as wry and down to earth, Michelle has a relaxed charm and infectious wit. She forms a connection with Judy (Linda Cardellini) at the Assisted Living Facility, where Michelle’s [...]

  • Kurt Sutter

    Kurt Sutter Fired From 'Mayans MC'

    UPDATED: Kurt Sutter has been fired from his role as co-showrunner on “Mayans MC,” Variety has learned from sources. Sutter notified the cast and crew of the show of his exit in an email after several complaints were made about his behavior on the set of the series. In the email, Sutter wrote that he had [...]

  • 'Watchmen' Boss Damon Lindelof on Building

    'Watchmen' Boss Damon Lindelof on Building an Alternate America

    In the fourth season of PBS’ “Finding Your Roots,” musician Questlove learns his ancestors came over to America on the very last slave ship in 1860. Dr. Henry Louis Gates Jr., who hosts the show shows him the ship manifest and tells him about the settlement in which they lived, and the musician begins to [...]

  • Kids' Programming Will Be a Battleground

    Why Kids' Programming Will Be a Major Battleground in the Streaming Wars

    When “Moana” left Netflix on Dec. 20, parents of little kids let out a collective wail of despair on Twitter and Facebook parenting groups everywhere. The phrase “ruined Christmas” was pointedly used in the streamer’s direction — sometimes facetiously, sometimes with the reflected ire of a preschooler who had awakened one morning to find her [...]

  • Wendy Williams Walk of Fame Honor

    Wendy Williams on Being 'Imortalized' With Walk of Fame Honor

    Just days after Wendy Williams learned she’d be receiving a star on the Hollywood Walk of Fame, the talk show host was in true form imagining how this honor would elevate her already storied career. “I’m already in the Smithsonian, so now I’ll be immortalized-immortalized,” Williams says. In addition to preparing for her star ceremony, [...]

  • Julia Garner

    'Ozark' Star Julia Garner Signs First-Look Deal With MRC Television

    “Ozark” producer Media Rights Capital (MRC) Television has entered into a first-look deal with series star Julia Garner. Under the deal, Garner will work with MRC to develop and produce television projects. She recently won the Emmy Award for best supporting actress in a drama for her work on the third season of “Ozark,” which [...]

More From Our Brands

Access exclusive content