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ViacomCBS set to lead media conglomerates in US ad sales

The proposed merger of CBS Corp. and Viacom Inc. would propel the new entity to the top of the U.S. media network advertising industry, industry data shows.

In the most recent quarter, CBS reported $1.42 billion in U.S. advertising revenue, while Viacom reported $976.0 million. Taken together, a merged ViacomCBS would have generated enough in domestic ad sales to eclipse NBCUniversal Media LLC's industry-leading $2.26 billion ad haul.

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In discussing the merger, CBS and Viacom executives pointed to opportunities to grow advertising revenue by combining the reach of CBS (US), the most-watched U.S. broadcasting network, with the younger audiences that tune in to Viacom's MTV (US) and Comedy Central (US) cable networks. The company also intends to apply advanced advertising technology from Viacom's Advertising Marketing Solutions business to the merged entity's entire portfolio. Together, executives estimated the companies would garner upward of $8 billion in annual ad sales.

Viacom's most recent quarterly results show a return to positive ad sales growth in the U.S. for the first time in nearly five years. Domestic ad sales grew 5.9% year over year to $976.0 million in the June quarter, bolstered in large part by Viacom's Advertising Marketing Solutions business, which registered an 84% advance. The unit accounted for almost 20% of Viacom's domestic ad dollars.

At CBS, advertising rose 7.3% year over year to $1.42 billion, with the domestic broadcast network ringing up a 9% advance, buoyed by coverage of the national semifinals and championship game of the NCAA Division I Men's Basketball Tournament. Underlying ad revenues were ahead 3% for the network.

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Conversely, AT&T Inc.'s WarnerMedia declined to $1.27 billion from $1.30 billion in the year-earlier period. CBS and Turner Sports air the marquee basketball matches from March Madness in alternating years under a joint rights deal.

For Fox Corp., advertising decreased 6.0% to $918.0 million. Ad revenues for broadcast network FOX (US) receded 8.1% to $627.0 million, owing to fewer FIFA World Cup matches and lower cyclical political advertising revenues compared with the prior-year quarter. On the cable side, ad sales dipped 1.4% to $291.0 million, tied to lower contributions from the FIFA Women's World Cup than the men's tournament, countered to some extent by higher digital ad sales at cable news leader FOX News Channel (US).

NBCU also saw ad revenues take a hit around the FIFA's events. While total U.S. advertising revenues slipped 2.4% to $2.26 billion, the broadcast segment was off 4.3% to $1.33 billion, with Telemundo (US) realizing lower sales from the FIFA women's tournament. Excluding the comparison with the 2018 men's event, broadcast segment ad revenues would have advanced in the mid-single digits, according to the company. Cable ad revenues were essentially flat at $931.0 million in the quarter, as higher rates were countered by audience declines.

It was mixed results at The Walt Disney Co.'s media networks segment, which grew 11.7% year over year to $1.87 billion. The cable networks unit, reflecting contributions from the consolidation of 21st Century Fox Inc. assets, surged 18% to just under $1.02 billion. Broadcasting ad revenues decreased 3.6% to $859.0 million, driven largely by an 11% drop in network impressions stemming from audience erosion at ABC (US), partially offset by gains in network rates and the Fox assets.

Discovery Inc., which has seen its portfolio expand following its purchase of Scripps Networks Interactive Inc. in March 2018, posted a 5.8% rise in domestic ad sales to $1.15 billion, up from $1.09 billion. The gains emanated from higher pricing and additional inventory, plus continued monetization across digital platforms. Results were hampered to some degree by lower overall ratings and audience declines in aggregate across the linear portfolio.