CBS and Viacom Are Near a Deal After Agreeing on Price

Bessie Dean
August 14, 2019

CBS was one of the first media companies to launch its own streaming service, CBS All Access.

Once the deal is completed, expected by the end of the year, ViacomCBS will have a combined library with more than 140,000 TV episodes and 3,600 film titles, including franchises such as "Star Trek" and "Mission: Impossible".

"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", said Bakish.

The all-stock deal, announced Tuesday, combines the most-watched US broadcast network with the parent of Paramount Pictures and cable channels such as MTV and Nickelodeon. Disney's is almost $245 billion and Netflix is at $136 billion.

While another acquisition could come later, the CBS-Viacom deal has always been Shari Redstone's top priority.

The last time the companies were in merger discussions, more than a year ago, Viacom directors had agreed to take 0.6135 of a CBS share for every nonvoting share of their business, people with knowledge said at the time.

The two companies have been major content spenders, having spent more than $13 billion combined in the past year, or close to the estimated $15 billion Netflix is expected to spend on content in 2019. Shari Redstone - who heads National Amusements, the majority shareholders of both CBS and Viacom - has been pushing for the companies to reunite for years. The new entity, known as ViacomCBS Inc., will be led by Bob Bakish as President and CEO, with Joe Ianniello serving as Chairman and CEO, CBS.

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Discovery, whose Chief Executive David Zaslav was briefly mentioned as a potential candidate to run CBS, is also busy building a non-scripted entertainment, natural history and "factual programming" empire.

CBS is buying Viacom in an all-stock transaction that values Viacom at its current stock market capitalization of $12 billion, the companies announced. ViacomCBS has a number of top platforms under its purview, including CBS's successful catch-up service and SVOD CBS All Access, as well as newly acquired AVOD platform Pluto TV, along with niche products such as CBSN, ET Live and Noggin. Viacom and CBS are largely not direct competitors, and the U.S. Justice Department recently lost its challenge to the AT&T takeover of Time Warner.

The split was a way to separate Viacom's networks like MTV, Nickelodeon and BET, which were very successful at the time, from the slower growth of the CBS network.

The combined content of CBS and Viacom will make it formidable in the streaming market.

Shari Redstone had been a big backer of re-combining the companies in the face of tough competition. Her efforts had been blocked by former CBS CEO Leslie Moonves and the CBS board. She will become chair of the combined ViacomCBS board, making her arguably the most powerful woman in the media industry.

Viacom's stock rose 2.4% and CBS 1.4% in trading Tuesday, a reflection of Wall Street having anticipated this deal, especially in recent days.

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