A merger of CBS (PARA -0.42%) and Viacom (NASDAQ: VIA) is reportedly inching ever closer to becoming a reality. After mergers like Disney-21st Century Fox (DIS -1.93%) and AT&T-Time Warner (T -0.35%), huge deals in media are becoming almost normal. Still, that doesn't mean Viacom and CBS coming together would be "no big deal" -- a merger this big could shake up everything in TV and streaming similar to what those earlier examples did.

A unified CBS and Viacom could have the media muscle to enter an already quickly expanding streaming space; like Disney before it, CBS-Viacom could plot a new streaming service full of its exclusive properties (or expand existing streaming service CBS All Access to that same end). That could be a big win for CBS and Viacom -- and it could represent a major blow to some streaming competitors.

Businessmen shake hands

Image source: Getty Images.

Who is left to deal with Netflix?

If CBS and Viacom merge, it seems likely that they will do what both AT&T and Disney did after their major mergers: announce a new streaming strategy. Media companies creating their own streaming services as homes for their TV shows and movies is the new normal. And that new normal has very dire implications for Netflix (NFLX -1.51%).

Netflix's new rivals are hitting it on two fronts. Every new streaming service backed by a major media company both creates a new Netflix alternative and makes it harder for Netflix to complement its original content with licensed hits. Disney's streaming strategy, for example, created forthcoming Netflix rival Disney+ while simultaneously taking Star Wars and Marvel Studios films out of Netflix's future plans. Meanwhile, the upcoming streaming service from Comcast (CMCSA 1.02%) will almost certainly mean the end of The Office's popular run on Netflix (Comcast owns The Office through NBCUniversal).

CBS and Viacom properties aren't as vital to Netflix's catalog as The Office or Star Wars, at least as far as we can tell from third-party analysis -- only CBS' Criminal Minds cracked the top 10 most-watched shows at last analysis, while shows from NBC, Warner, and ABC all made it into the top five. But every media company that starts its own streaming service is one fewer potential partner for Netflix when it comes to licensed content, and that can't be welcome news for it.

A dark day for skinny bundles

Disney and AT&T's big streaming plans were built around their media properties and substantial IP. Disney's holdings in particular included live TV channels, but it was clear from relatively early on that Disney's TV channels (including ABC and ESPN) were not a huge part of its live streaming strategy -- for instance, ESPN+ does not include a live feed of the ESPN TV channel. The threat was there, but on-demand content was the focus.

But at CBS and (particularly) Viacom, live TV channels are the name of the game. Viacom's relatively weak streaming holdings were bolstered by its recent acquisition of streaming company Pluto TV, but Viacom's most notable presence on the streaming scene comes when live TV streaming services like Dish's (DISH) Sling TV offer Viacom networks like Comedy Central, MTV, and Nick Jr.

Viacom has always been a bit of a thorn in the side of live TV streaming services, and not all such live TV streaming services have been able to cut deals with Viacom -- Sony's (SONY -1.11%) PlayStation Vue, for instance, does not have any Viacom channels as of this writing. Things could get even more tense if Viacom and CBS go direct to consumers with live TV. CBS already includes a live feed of its eponymous flagship network in CBS All Access subscriptions (select markets only). It's not that hard to imagine a unified CBS-Viacom offering a skinny bundle-like service exclusively comprising CBS and Viacom networks.

More of the same

There are a couple of likely losers in this deal, but there's no doubt at all about the winner. If CBS and Viacom can pull this off, they'll form a company that has a much better chance of competing with the streaming and media giants. And if all goes to plan, we'll see something that we've seen before: a big media merger leading to a new streaming service. For streaming companies that, like Sling TV, lack massive media libraries of their own, this pattern must be getting very old indeed.