ViacomCBS Plans to Transform in Response to Cord-Cutting
This past quarter, American households with internet-connected TV passed households with cable subscriptions for the first time. The trend of cord cutting, or switching from a bundled TV concept to specific services, is picking up steam amid the pandemic. With no live sports being aired, and limits to live content offerings, traditional differentiators cable once relied on are now absent.
For the nation's largest network, CBS, these trends pose an existential threat. Parent company, ViacomCBS (NASDAQ: VIAC), relies on advertising revenue from cable. With the pandemic severely limiting ad-buyer's budgets, that revenue stream has been relegated to more of a trickle at this point. For their first quarter, which did include some normal weeks pre-pandemic, ad revenue still fell 19%. Quarter two is expected to be worse before a recovery takes hold. Traditional TV's uncertain future places a ceiling on Cable's value proposition and is perhaps the reason behind ViacomCBS's low valuation.
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Source Fool.com
