CBS & Viacom Have Officially Agreed to Merger Into a Single Company

Esequiel Farfan
Agosto 14, 2019

One news outlet described management's vision as "a blockbuster. move which is created to bring the network of Dan Rather in touch with the MTV generation".

CBS ($CBS) and Viacom ($VIA) announced they reached an agreement to merge, with Viacom shareholders receiving almost 0.6 CBS shares for each Viacom share they own. The new company wants to speed up the growth of its streaming services, including CBS All Access, Showtime, and Pluto TV, the free ad-supported service that Viacom owns, and drive more advertising to its services. To expand its library, Disney bought Fox's entertainment businesses for $71 billion in March, while DirecTV owner AT&T bought Time Warner a year ago for $81 billion.

Now, Disney, Comcast's NBCUniversal and AT&T's WarnerMedia are jumping in with their own services as well to challenge Netflix, Amazon, Google and other tech companies encroaching into entertainment.

The companies said they expect the deal, which still needs to win regulatory approval and clear other conditions, will close by the end of this year. CBS already had its CBS All Access streaming service and Showtime has its own subscription service as well, but The Verge says ViacomCBS "will be able to offer a library of more than 140,000 TV episodes and more than 3,600 movies", including the Transformers franchise. "It would also have greater combined scale of content production, diversity and distribution".

But that may not be big enough for the long term, Begley added. Disney's is almost $245 billion and Netflix is at $136 billion.

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Shari Redstone, the vice chair of both companies who had been pushing for the reunion, noted that she thought the combined unit "can realize the incredible power of their combined assets" and promised "a world-class, multiplatform media organization". 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.

The companies have sought a merger several times in recent years, but their management teams' differences were never bridged. 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. The changes paved the way for Tuesday's announcement.

Under the deal's terms, Viacom shareholders would receive about a 0.6 share of CBS stock in exchange for 1 share of Viacom stock. The Redstones' National Amusements would retain control of the combined ViacomCBS through its ownership of Class A voting shares that now represent almost 80% of the shareholder votes at both companies. The deal would close by December 31, pending any regulator approvals.

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".

Joe Ianniello, the president and acting chief executive officer of CBS Corp., will become chairman and CEO of CBS, overseeing all CBS-branded assets in his new role, the companies said.

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