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Viacom Entered Into Netflix Partnership Because It Had to

Viacom Entered Into Netflix Partnership Because It Had to

Viacom Entered Into Netflix Partnership Because It Had to

If you can’t beat them, join them. That’s an adage as old as time, but it still applies in the modern era, and curiously in media entertainment.

Long-suffering Viacom (NASDAQ:VIA, NASDAQ:VIAB) shareholders found this out recently when the company joined forces with Netflix (NASDAQ:NFLX). NFLX, if I need to remind anybody, is a fierce rival to traditional media outfits.

The details of the partnership makes the concept even harder to grasp initially. Under the agreement, Viacom will produce content for NFLX. Although it’s an admission that things aren’t going well for VIA these days, offering content to a streaming service isn’t out of the ordinary. CBS (NYSE:CBS) and Warner Bros. have made similar deals with Netflix.

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But unlike those major studios, Viacom will offer network-branded content. Its foray into the streaming media world will start with Nickelodeon-branded programming. From there, Viacom CEO Bob Bakish indicated that he wishes to include other network-based shows. These could include marquee brands such as BET, Comedy Central and MTV.

This surprising move gives Viacom a much-needed presence in the streaming-content market. No matter how you cut it, VIA is an aging company in an aging industry that’s suffering death through a thousand cuts.

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Additionally, consolidation is the name of the game. First, we have AT&T (NYSE:T) and Time Warner (NYSE:TWX). Next, it’ll be Twenty-First Century Fox (NASDAQ:FOXA) with Walt Disney (NYSE:DIS) or long-shot Comcast (NASDAQ:CMCSA).

Viacom had to do something, and the Netflix deal makes sense in that regard. But from another perspective, critics point out that the content partnership could drive more viewers to Netflix. Again, Netflix already competes with traditional cable TV, so the deal is extremely risky for Viacom.
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