CBS and Viacom agree to sign $30 billion merger deal

CBS-Viacom Reunification Expected Soon

CBS-Viacom Reunification Expected Soon

It is possible that a combined CBS-Viacom will now seek to buy smaller media players to make itself even bigger. CBS' market capitalization is about 50 percent larger than Viacom. The companies say the combined company will have $28 billion in revenue. The deal would combine such well-known entertainment brands as CBS and Showtime with Viacom's Paramount television and movie studios, Nickelodeon, Comedy Central and MTV.

CBS and Viacom have had an on-again, off-again relationship.

The blockbuster proved a bust, however, and the companies split up just a few years later, in 2005. 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.

The new company will be called ViacomCBS and Redstone's daughter, Shari Redstone, will be named chair. To expand its library, Disney bought Fox's entertainment businesses for $71 billion in March, while DirecTV owner AT&T bought Time Warner past year for $81 billion. US cable conglomerate Comcast bought a majority of European pay-TV operator Sky News in October for $40 billion.

With the media industry consolidating ever further into a handful of giant companies, the transaction could give the combined entity much greater clout in negotiating deals with pay-TV distributors.

"Right now there's a major transition going on regarding the consumption of TV - people are moving away from the traditional bundle to direct-to-consumer, on-demand shows or combinations of both", said Neil Begley, an analyst at Moody's. The combined CBS and Viacom would be valued at roughly $30 billion, and Viacom shareholders would receive 0.59625 CBS shares for each share they own. It is unlikely that CBS-Viacom could itself become an acquisition target, given how potential acquirers nearly all have their hands full with their own big purchases. "It would also have greater combined scale of content production, diversity and distribution".

If you work in this industry long enough, you'll see how cyclical it can be. This is all sure to bring ViacomCBS Inc. into the conversation with Netflix, Disney+, and WarnerMedia as the streaming wars continue to heat up.

Shari Redstone - who heads National Amusements, the majority shareholders of both CBS and Viacom - has been pushing for the companies to reunite for years.

Mr Redstone broke up CBS and Viacom 14 years ago.

Redstone will be chairwoman of the combined company's board. "My father once said 'content is king, ' and never has that been more true than today". The changes paved the way for Tuesday's announcement. But Moonves was against the idea, as CBS was stronger and more profitable than Viacom. 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. The deal would close by December 31, pending any regulator approvals.

Viacom CEO Bob Bakish will become the president and chief executive officer of the combined ViacomCBS, the companies said. Joe Ianniello, who had been president and acting chief executive at CBS, will now be chairman and chief executive of the company's CBS division.