Published: Wed, August 14, 2019
Life&Culture | By Sue Mclaughlin

CBS and Viacom to reunite in massive merger

CBS and Viacom to reunite in massive merger

Together, the two companies generate more than $28 billion in revenue.

After some false starts, CBS and Viacom announced Tuesday they will combine to form the latest media empire in a wave of mergers driven by the need for companies to reformulate themselves for the streaming era.

The combined company will possess a portfolio of powerful consumer brands, including CBS, Showtime, Nickelodeon, MTV, BET, Comedy Central and Paramount Network.

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.

"Our unique ability to produce premium and polar content for global audiences at scale - for our platforms and for our partners around the world - will enable us to maximize our business for today, while positioning us to lead for tomorrow", Bakish said in a statement. 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 US; and niche products such as CBSN, ET Live and Noggin.

CBS and Viacom have had an on-again, off-again relationship. The library covers around 140,000-plus TV episodes and 3,600-plus film titles. CBS has a market value of $18 billion and Viacom has a market value of about $11.7 billion. Now, this is far from a done deal as regulatory approval is still needed before the merger can be completed.

Mr Redstone broke up CBS and Viacom 14 years ago. The current trading ratio between the two companies is around 0.59, based on their stock prices as of the close on Monday.

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The companies also said their merger will improve opportunities in advertising and deals with distributors and create a stronger player to license their catalog to other platforms worldwide.

That isn't stopping Viacom CEO Bob Bakish, who will lead the combined company, to declare that ViacomCBS will be "one of only a few companies with the breadth and depth of content and reach to shape the future of our industry".

CBS and Viacom, both based in NY, were one entity until 2006, when the Redstone family decided investors would give them greater value as separate companies.

I'm extremely curious to see if CBS, which commands 22% of the TV viewership share (that's larger than Disney, Fox, Comcast, Warner, and Discovery), will be able to survive in the long run with the rise of streaming. With Moonves and his allies on the CBS board out, Redstone moved aggressively to reignite merger discussions, according to reports.

CBS Corp (CBS.N) and Viacom Inc (VIAB.O) have reached a deal to reunite media mogul Sumner Redstone's US entertainment empire after 13 years apart.

"We will establish a world-class, multiplatform media organization that is well-positioned for growth in a rapidly transforming industry", she said. A merger was adamantly opposed by Leslie Moonves, the former powerful chair of CBS who was brought down in a sexual harassment scandal past year.

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