CBS, Viacom reunite, hoping to take on Disney and Netflix

Brunilde Fioravanti
Agosto 14, 2019

That portfolio of powerful consumer brands, includes CBS, Showtime, Nickelodeon, MTV, BET, Comedy Central and Paramount Network, as well as one of a library comprising 140,000+ TV episodes and 3,600+ film titles, and fan-favorite franchises such as Star Trek and Mission: Impossible. It followed marathon negotiation sessions this week as the two sides hashed out a price for the long-awaited merger.

Viacom chief executive Bob Bakish will be the president and chief executive of the combined company.

The deal represents a coming together of two disparate arms of the vast media holdings owned and controlled by Sumner Redstone and his daughter, Shari - who will be the vice chair of the CBS and Viacom board of directors - under the umbrella of the privately held National Amusements. CBS's current CFO will take over as CFO for the new company.

The CBS-Viacom merger will add a newly enlarged company to the mix with a combined market value of about $30 billion - big enough to still matter and grow through further media acquisitions, yet still something of a snack for, say, Apple, which is sitting on $245 billion in cash. It also could help them spread out the cost of content purchases like sports rights over a wider swath of channels. The companies, using the code names "Comet" and "Venus", had expected to save at least US$1 billion by combining. The combined company is expected to accelerate and expand its direct-to-consumer strategy through subscription and ad-supported offerings, including CBS All Access and Showtime; Pluto TV, the leading free streaming TV service in the USA; and niche products such as CBSN, ET Live and Noggin. Annually, it is estimated to generate about $28 billion in revenue. CBS, led by Moonves, fought in the boardroom and courtroom to dilute the voting stake of National Amusements to prevent her gaining control of the company. Bringing the two companies back together has always been a goal of Shari Redstone, who controls the company with Sumner, the aging family patriarch who has faced numerous health issues.

CBS shares have dropped since then.

The companies have sought a merger several times in recent years, but their management teams' differences were never bridged.

"Today marks an important day for CBS and Viacom, as we unite our complementary assets and capabilities and become one of only a few companies with the breadth and depth of content and reach to shape the future of our industry", Bakish said.

CBS has been weighing its next moves since firing Moonves last September, after a dozen women accused him of sexual misconduct, setting off a shake-up that included a board overhaul. Ianniello, formerly chief operating officer, has been running the company as interim CEO ever since. But Moonves was against the idea, as CBS was stronger and more profitable than Viacom.

Viacom became the vehicle that marketed reruns of "I Love Lucy" and "Gunsmoke", and attracted the interest of Sumner Redstone as an investment. If it does not successfuly acquire other properties, the merged company may have just made itself appealing enough to be bought by a larger player, like Amazon - which doesn't have a network - or Verizon, which lacks any major TV presence.

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