ViacomCBS (NASDAQ:VIAC) stock is a dividend play for viewers as old as its audience.

The brief burst of the Archegos “scandal” (it wasn’t illegal, just stupid) sent the stock over $90 early this year. But its intrinsic value is where it trades at this writing. That would be about $40. The market cap is $26.3 billion, close to its estimated 2021 revenue. It’s just 7.6x earnings, the dividend yielding 2.5%.

Why so cheap? ViacomCBS can’t be sold without the consent of Shari Redstone, heir to the late Sumner Redstone. Her voting shares act as a veto over major corporate action. It’s unfair, it’s unfortunate, but as Walter Cronkite said, that’s the way it is.

Find the Viewer

CBS was founded around easy access to viewers through its broadcast stations. Viacom, originally CBS Films, rode the cable wave to easy customer access. Now ViacomCBS must rebuild those relationships in the streaming era. It’s not easy.

Paramount Plus, ViacomCBS’ flagship streaming service, lags the market with 36 million subscribers. Now it’s taking page from the Walt Disney (NYSE:DIS) book. It’s pushing a bundle that adds Showtime, originally a pay cable service, at a teaser price of $10/month (with ads).

Showtime had been offered ad-free at $11, Paramount Plus at $5 a month with ads, $10 a month without. Now both are combined at the $10 price point. ViacomCBS also owns targeted streaming services, Noggin for kids and BET+ for black audiences. It claims a total streaming audience number of 42 million.

ViacomCBS has also signed a deal with rival Comcast (NASDAQ:CMCSA) to launch a European streamer called SkyShowtime next year. Comcast had gotten Sky, an international satellite service, after Disney bought Fox’ entertainment assets. The new service combines Paramount Plus with Comcast’s Peacock, using the latter’s back-end technology.

Shaking Up Paramount

The Paramount production unit is also being shaken up.

Longtime studio boss Jim Gianopulos, who agreed to supply Netflix (NASDAQ:NFLX) with content in 2018, is out. Brian Robbins, who had been heading the Nickelodeon cable network, is in. He is being joined by David Nevins, who will head the studio’s TV production.

The question is, what is movie and what is TV in a streaming world? The business model for streaming combines those of a cable operator and cable programmer, with a direct link to the customer. The theater business collapsed during the pandemic and the box office is barely half what it was. That means there are few big budgets for theater screens and more films with TV tie-ins. 

For all the big talk about streaming growth, only Netflix is profitable. Disney and HBO, now run by Warner Discovery, could turn a profit by 2024. Projects are being measured by their impact on getting new customers and reducing churn.

The Bottom Line for VIAC Stock

VIAC stock is cheap because its streaming operations may not turn a profit for years.

Its current broadcast and cable channels remain cash cows. But their audiences are fading, or going to streamed “mini-bundles” like Alphabet’s (NASDAQ:GOOGL, NASDAQ:GOOG) YouTube Premium. In those deals it’s the service, not the streamer, that has control. The result is a carriage dispute between YouTube Premium and Comcast’s NBCUniversal. NBCU is warning viewers they will lose programming. Comcast is in the same position cable networks and broadcasters were in a few years ago, begging viewers for support.

Until ViacomCBS gets control over its customer relationships, and turns a profit on them, VIAC stock will continue to languish.

On the date of publication, Dana Blankenhorn held no positions in companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Living With Moore’s Law: Past, Present and Future available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.