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

Carla Harmon
August 14, 2019

The combined company will also have more than 750 series now ordered to or in production. Now, this is far from a done deal as regulatory approval is still needed before the merger can be completed.

"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 in a statement.

Even with the combined portfolio of companies that include the CBS television network, CBS News, Showtime cable network and book publisher Simon & Schuster with MTV, Paramount studios and Nickelodeon, the new company, which will be called ViacomCBS Inc, will lack the firepower required to take on the likes of Walt Disney Co DIS.N and Netflix Inc NFLX.O , Redstone believed. Disney's is almost $245 billion and Netflix is at $136 billion. While Viacom and CBS are publicly traded, they are both controlled by the family through National Amusements.

Under an agreement, Shari Redstone agreed not to push for a reunion for at least two years, but that left open the possibility of CBS itself pushing for it. 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.

More than two months before CBS Corp CBS.N and Viacom Inc VIAB.O succeeded at a third attempt to recombine, controlling shareholder Shari Redstone had already decided the new company needed to get bigger.

New leadership has been set out, with Viacom boss Bob Bakish leading the merged entity, and CBS's acting CEO Joe Ianniello becoming chairman-CEO of CBS and leading on the CBS brands. The companies collectively operate CBS All Access and Showtime's streaming option, along with Pluto TV (a free streaming TV service in the US) and newcomers such as CBSN, ET Live and niche players like Noggin.

CBS shareholders will get 61% of the combined company, called ViacomCBS Inc., with the remainder going to Viacom investors.

CBS and Viacom have ties that go back to the 1970s. CBS under longtime chief Les Moonves became more profitable and Viacom struggled, hurt by weakness in its Paramount studio and people dropping cable in favor of streaming.

Redstone will be chairwoman of the combined company's board.

But over time, the two companies' fates were reversed.

"The combined CBS-Viacom would have many positive attributes, from cost synergies to dramatically improved leverage with distributors for the Viacom networks", Moody's analysts wrote in a note. Then the CBS board went through a dramatic overhaul a year ago following the departure of longtime CEO Leslie Moonves over misconduct allegations. "This merger is another step in the "alignment of the troops" toward the big battle", says Gideon Gilboa, senior vice president for product and marketing, media, and telecom at Kaltura.

The stocks of CBS and Viacom both rose less than 2% in afternoon trading Tuesday, a reflection of Wall Street having anticipated this deal, especially in recent days.

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