Viacom, CBS owner Shari Redstone says media companies need scale

By Jessica Toonkel

(Reuters) - Media content companies must get bigger to compete in the quickly changing media landscape, Shari Redstone, whose family controls Viacom Inc and CBS , told attendees of a luncheon on Tuesday at the Paley Center for Media in New York City.

"Scale matters now and is going to continue to matter in the future," said Redstone, when asked about whether she thinks CBS and Viacom should be combined. "Obviously it's never that simple."

As competition for viewers increases in a shrinking pay TV market and AT&T Inc is in the midst of buying Time Warner Inc , content companies are wrestling with ways to grow their business.

Redstone's remarks come almost a year after she and her father, 94-year old-Sumner Redstone, pushed to merge Viacom and CBS. They ultimately pulled the plan after negotiations between the two companies failed..

For now, the two companies are being run separately.

Scale could also come in the form of a merger or partnership with a telecommunications company, Redstone said, when asked about potential deals of that nature.

"We are only going to succeed if we have the content where consumers want to watch it," she said. "I think this is a critical piece of our business going forward, both for CBS and Viacom and for all media companies."

One audience member asked if Viacom needed to acquire content, such as sports, to be part of the many bundles of online streaming channels. Redstone, who also is on the board of Viacom and CBS, answered that Viacom could find partners, and an acquisition was not necessary.

CEO Bob Bakish is working to turn around Viacom, after years of declining ratings and ad revenue. Under his leadership the media company is developing a short form content unit, which will create programming for various delivery methods, including direct to consumer via the internet, Redstone said.

"The media companies have an advantage when it comes to storytelling because we can figure out how do we want to tell our story among all these different platforms," she said.

(Reporting By Jessica Toonkel; Editing by David Gregorio)