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CBS and Viacom Announce Long-Awaited Merger

The Wrap Tuesday, 13 August 2019
After years of starts and stops, CBS and Viacom are finally getting back together. The two companies announced their long-awaited merger on Tuesday, which valued Viacom at $12 billion.

The two companies agreed to an exchange ratio of 0.59625 a share of CBS for each of Viacom’s for the all-stock merger.

Viacom CEO Bob Bakish, as expected, will lead the newly combined company as its chief executive, with Joe Ianniello named chairman and CEO of CBS, putting him in charge of all CBS-branded assets. Ianniello has been serving as acting president and CEO since last September, following the resignation of Leslie Moonves.

The deal puts the CBS broadcast network, Viacom’s stable of cable channels like MTV and Nickelodeon, and the Paramount film and TV studio under one roof. The transaction is subject to regulatory approvals and other customary closing conditions. It is expected to close by the end of this year.

CBS and Viacom executives will hold a conference call at 1:30 p.m. PT.

“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. “Our unique ability to produce premium and popular content for global audiences at scale -for our own platforms and for our partners around the world -will enable us to maximize our business for today, while positioning us to lead for years to come. As we look to the future, I couldn’t be more excited about the opportunities ahead for the combined company and all of our stakeholders -including consumers, the creative community, commercial partners, employees and, of course, our shareholders.”

It’s been a long time coming for the two former-sister companies to get back together. The two companies split from each other in 2006.

CBS and Viacom walked away from a merger last year amid a legal tug of war between Moonves and Shari Redstone, who runs CBS’ controlling stakeholder National Amusements. Redstone has long had her eye on reuniting the two companies, but had received pushback over Viacom’s poor performance.

But the company is in a much better place this time around. Earlier this year Viacom bought the ad-supported free streaming service Pluto TV, which has shown early success with monthly active users increasing 50% since December and reaching 18 million users in August. During its third quarter earnings last week, Viacom saw domestic ad revenue grow (by 6%) for the first time in five years and said that its filmed entertainment group is on track to be profitable for the fiscal 2019 year.

Since last summer, the industry has bulked up.

The media industry is in a far different place since the last time CBS and Viacom were corporate siblings 13 years ago.

The industry has become all about scale. Disney finished off its $71.3 billion acquisition of Fox’s TV and film assets in March, and last year AT&T acquired Time Warner, and turned into WarnerMedia, aligning its entertainment assets — HBO, Turner, Warner Bros. — closer together.

Tech giants like Netflix and, to a lesser extent, Amazon, have upended the entertainment industry, luring in high priced talent and taking advantage of shifting consumer behavior that has moved away from live television. Within the next year, Disney, Apple, WarnerMedia and Comcast will launch their own direct-to-consumer offering in what figures to be an all-out land grab for consumer dollars.

CBS has two smaller streaming offerings in CBS All Access and Showtime, while Viacom has the free streaming app Pluto TV and the upcoming BET+. It remains to be seen if the new CBS-Viacom will pool its assets together, which includes film and TV studio Paramount, to launch a more comprehensive streaming competitor.

More to come…

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