Philo insulated from effects of ViacomCBS merger for now

Philo Chief Executive Officer Andrew McCollum
Philo Chief Executive Officer Andrew McCollum. (Photo: Philo/Handout, Graphic: The Desk)

A blockbuster merger between Viacom Corporation and CBS Corporation will not impact Philo’s ability to carry Viacom-operated cable networks for at least another year, a company executive said.

In an interview with The Desk last month, Philo’s founder and chief executive Andrew McCollum said the company won’t have to consider adding CBS or Showtime to its platform for at least another year because its retransmission agreement with ViacomCBS pre-dates last year’s merger of the two programmers.

McCollum’s comments were included in a wide-ranging feature story published by The Desk on Tuesday that focused on the momentum of budget pay television companies like Philo who compete against more-expensive offerings from cable, satellite and streaming cable alternatives.

Philo offers around 70 general entertainment, lifestyle and knowledge channels for $20 a month. The company is able to keep costs low because it negotiated agreements with programmers who don’t offer costly local, sports or news channels.

Many of Philo’s channels come from its investor-owners, including ViacomCBS. At launch, Philo cleared nearly all of the cable networks programmed by what was then Viacom Corporation. The company has not been asked to onboard CBS or Showtime networks since the merger was finalized last year.

But that could change when Philo’s pre-merger contract with ViacomCBS ends. In recent months, ViacomCBS has pressured programmers to onboard local CBS channels, the premium movie network Showtime and other CBS and Viacom-programmed cable channels. That led Google-owned YouTube TV to add Comedy Central, MTV and other ViacomCBS cable channels over the summer that had largely been absent from the service, but the addition of the channels also triggered a 33 percent subscription fee increase for customers.

Another service, Dish Network-owned Sling TV, was impacted by the merger in a different way: A renewed agreement with ViacomCBS will result in Sling TV customers paying more to access the Paramount Network when it’s moved out of Sling TV’s base package into an add-on tier at the end of the month.

In July, McCollum said Philo remains committed to offering a robust selection of pay TV channels while keeping prices stable for customers. Though Philo is still more than a year from having to negotiate a new agreement with ViacomCBS, the company is already weighing various options.

“To be perfectly honest, CBS is really just one channel — it’s not actually just one, there’s a couple of others — but if you look at any of the broadcasters, it’s the smallest delta,” McCollum told The Desk. “If we did add [CBS], I’m not sure it would be terrible.”

In other words, the expense of onboarding CBS and Showtime  in order to keep the Viacom cable networks on Philo will likely be less than reaching an entirely deal with Comcast or Disney, the parent companies of NBC and ABC respectively.

“You can look at it in some ways and say YouTube adding the Viacom networks is a much larger change than us adding the CBS,” McCollum said.

Though Philo is keeping an open mind, McCollum said he’s still not sure adding CBS simply to keep the Viacom cable networks is worth it.

“I’m not sure we would necessarily welcome [CBS] with open arms,” he said, adding that Philo operates around, not through, the business shifts of its programmers.

“We don’t really plan our strategy around that kind of change,” McCollum said. “We think, how do we give the greatest value to our subscribers?”

To do that, Philo might have to look to other content producers. In recent weeks, there’s been signs the company is doing just that: Philo has reached agreements with Sony, Urban One and other programmers to bring three new channels — Get TV, TV One and INSP — to subscribers without raising prices for customers. The company also started offering premium movie networks Starz and Epix to customers with a sweetheart deal that saw deep introductory discounts on both.

When asked if Philo’s new content deals was a hedge on an eventual future without ViacomCBS channels, McCollum didn’t admit it was, but he also didn’t say it wasn’t.

“We’re always looking at ways to create a different service from others in the space…so we can meet the needs that people have,” McCollum said. “We’re definitely always looking at that. You will see us add programming in pursuit of that goal.”