What The New 'Star Trek' Series Means For CBS Investors

Summary

• CBS’s management understands that sci-fi/fantasy is in hot demand.
• CBS wants to adapt to the streaming media age to encourage consumer demand.
• A possible split from Star Trek’s story “canon” could prove to be problematic creatively.

Image source: Star Trek.com

On Monday, CBS Corporation (CBS) announced a new Star Trek series that will premiere on traditional national television via the CBS television network. After that, all new episodes will be streamed through CBS's All Access app. This demonstrates an interesting development in the world of media, sci-fi fantasy and the investment world. Let's examine.

Management understands Star Trek's potential

The management of CBS clearly understands that fantasy is in demand. The rebooted J.J. Abrams' Star Trek movie franchise turned into a huge blockbuster. Walt Disney's (DIS) Marvel-based films, as well as Hasbro's (HAS) Transformers live action films, experienced a great deal of success. An article on the Orange County Register's website, offered an interesting theory as to the popularity of sci-fi/fantasy tales. Dismal viewpoints about the state of the economy, the middle class and upward mobility leave people wanting to escape reality. Star Trek can offer that to consumers.

Media savvy

CBS's management understands that younger people tend to consume less television. This was something that Disney's management alluded to in its Q3 earnings call. Making this new Star Trek show exclusive to its All Access app not only demonstrates that CBS is willing to adapt to changing consumption patterns, but hasten them. Keeping Star Trek exclusive to the app will help kickstart the transition to this new era marked by subscription-based streaming services. Personally, I think this represents a play on a fan's "Trekker" mentality. Star Trek fans tend to feel like they are a part of an exclusive community or club. In a streaming media consumption world, people may be willing to pay to be part of this club.

Interestingly, CBS also looked towards history as a guide in building the Star Trek brand among audiences. CBS's management understands that Star Trek rose to sci-fi prominence through syndication. On that note, CBS's press release said this, "Sign up for a free trial of CBS All Access and prep for the new show with every episode of the classic Star Trek series available commercial-free!" This gives audiences the chance to beef up on Star Trek's background by doing what syndication used to do for Star Trek -- keeping it alive.

Canon split

There is one disturbing aspect about the new Star Trek series that can be found at the bottom of the press release issued by CBS Corporation, "The new television series is not related to the upcoming feature film Star Trek Beyond, which is scheduled to be distributed by Paramount Pictures in summer 2016." According to the website thewrap.com, Star Trek was essentially torn in two when CBS was separated from Viacom (VIA) (VIAB). CBS possesses the rights to Star Trek's old television episodes and has the legal capability to create new episodes. Viacom's subsidiary, Paramount, essentially controls Star Trek's motion pictures.

This aforementioned quote could mean that the new Star Trek series will exist in its own microcosm, separate from all the other series and films. At the very least, it could mean that the show will exist independently of the previous films, but will be connected to old episodes. Speaking from personal experience, consistency in a fictional universe adds depth and meaning to the story. One of the strengths of the Marvel Cinematic Universe is that television shows such as Marvel's Agents of Shield and Daredevil refer to events that happened in the Marvel films. Splitting Star Trek's canon could represent a huge creative and strategic mistake on the part of CBS and Viacom.

What Does this Mean for Investors?

The reintroduction of Star Trek to episodic storytelling represents a huge strategic positive for CBS. If CBS and Viacom play their cards right they could successfully take eyeballs from some of Disney's franchise films. However, some analysts argue that room exists for many multiple franchise sagas. CBS definitely deserves more of your research time. Also, it wouldn't hurt to give Viacom an in-depth look.

Analyst’s Disclosure: I am/we are long DIS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Author is a big Star Trek fan.