Pivotal Research Group’s Brian Wieser’s generating a lot of buzz on Wall Street today with a report that makes the case for a deal. CBS chief Les Moonves has said he’s interested in Sony Pictures, although the Tokyo based company says it’s not selling. Wieser finds it “difficult to imagine” that the struggling electronics giant would reject a serious offer for the studio, which doesn’t clearly fit with its other operations. He figures the studio could go for at least $10B based on Lionsgate’s market value (about $2.6B) — although he acknowledges that “relatively little is known” about the nuts and bolts of Sony’s studio business. And CBS, which recently announced plans to raise cash from its billboard business, could afford to make such a deal. Moonves would see quick benefits by wielding the ax at Sony’s production company, which Wieser says appears to be “materially more bureaucratic than others in the industry.” A deal also would make sense strategically, he adds, by giving CBS “a significant foothold in international television programming.” Sony has 124 channels in more than 159 countries including SET (general entertainment), AXN (edgy entertainment and movies), and Animax (which focuses on anime). In the U.S. Sony owns a piece of GSN and FearNet. Building off of those assets and Sony’s movies, Showtime could “more closely match HBO’s global footprint.” CBS would find it easier to sell its programs overseas. And CBS could use Sony’s library to cut more lucrative licensing deals with streaming services such as Netflix and Amazon. Wieser also says that Sony Entertainment honchos Michael Lynton and Amy Pascal “would be significant assets.”
What about other potential targets for CBS? AMC Networks would be a fit for CBS, but “it is and is likely to remain an expensive stock,” the analyst notes. Starz — which just became an independent company — would be less expensive, but CBS would probably prefer to just increase its invest in Showtime rather than buy a rival. CBS shares are +3.3% in mid-afternoon trading, while Sony is +5.4%.


Yeah, this is all so cool and smart and deal maven Wall Street. However,it ignores a few widely known and obvious facts: Sumner Redstone controls CBS. He also controls Paramount. He will be 90 in May. What is the CEO of Viacom, Philippe Dauman, who is also Redstone’s executor, going to do when Mr. Redstone passes to the great movie theater in the sky? One imagines he’ll put the two back together. And currently, why does one guy need to own two competing movie studios w/o having the current ability to put them together and cut the duplicate overhead. Differently put, who put Wieser up to this story: Les Moonves or someone at Sony?
Dauman and Moonves are not the best of friends. But separate from that – would Lynton and Pascal really want to report to someone who actually understands the movie/TV business instead of a Japanese owner that is distracted by their main (struggling) electronic business and thus likely gives those two a lot more autonomy then they would experience as part of another studio.
Not really Lynton and Pascal’s call, but I’m sure you’re right about their thinking…
Would CBS also get Columbia and Screen Gems? The Screen Gems library is full of classic TV and would be a great fit with the current CBS library; which include Desilu, Paramount, CBS, Spelling, and Republic.
The last thing we need is one of the major media conglomerates to get even bigger. Thanks but no thanks Les.
With the creeping of Amazon, Netflix and Youtube into the entertainment business do you really think CBS would be a major media goliath threat? Don’t think so.
Google is the real threat here.
I hate to think how that might impact Sony’s preservation/restoration work, which has generally been far ahead of the curve compared to other studios. Paramount’s track record with that has been abysmal.
While on paper CBS and Sony Pictures look a good fit I’m not sure just how practical such a thing would be in reality. SPE has a massive staff and there would (sadly) have to be a lot of downsizing and restructuring to make everything ‘fit’ together. And I don’t think for one second that Pascal would be kept around for any length of time let alone continue to run the business.
It’s actually something of a ‘Catch 22′ situation as CBS is almost certainly the only media entity that would keep SPE going as an actual studio rather than the likes of Time Warner or News Corp who would just shut the whole thing down and asset strip it.
And does anyone really believe that a post Redstone Viacom is going to be anything other than M&A fodder? Ol’ Philip can barely handle everything now and that’s when he’s sitting on Sumner’s lap. A media titan of old he is certainly not.
Does this guy really believe that SPE is worth TEN BILLION DOLLARS!!!! If Wall Street truly believes that I have a bridge that they might be interested in buying.
Paramony? Columbiacom? CBS/TriUnemployment?
thanks for the chuckle…needed that today!
The James Bond and Spider-Man franchises, the various tv assets, the vast content library – the company is worth more than 10 billion easy. It made 8.12 billion in 2012 alone for Christ’s sake. Just because Sony’s tech business is struggling doesn’t mean their entertainment arm should be undervalued.
Why can’t Les Moonves just leave SPE alone?? If Hirai says SPE isn’t for sale, then it’s not for sale. Point blank. For one thing, what if Sony acquire CBS Corporation and spin-off the publishing, outdoor, and radio assets?