- This week, CBS and Viacom announced it is merging in an $11.7 billion all-stock deal. Shari Redstone will become the chair of the combined entity.
This week, CBS announced it is merging with Viacom in an $11.7 billion deal. The all-stock deal was announced on Tuesday and it combines the most-watched U.S. broadcast network with the parent company of cable channels like Comedy Central, MTV, Nickelodeon, BET and the movie studio Paramount Pictures.
Shari Redstone is going to become the chair of the combined entity called ViacomCBS. Redstone’s family controls both companies as her 96-year-old father Sumner Redstone is known for putting together these powerful media brands.
“I am really excited to see these two great companies come together so that they can realize the incredible power of their combined assets. My father once said ‘content is king,’ and never has that been more true than today,” said Shari Redstone in a statement. “Through CBS and Viacom’s shared passion for premium content and innovation, we will establish a world-class, multiplatform media organization that is well-positioned for growth in a rapidly transforming industry. Led by a talented leadership team that is excited by the future, ViacomCBS’s success will be underpinned by a commitment to strong values and a culture that empowers our exceptional people at all levels of the organization.”
Viacom CEO Robert M. Bakish will be leading heading up the combined entity as CEO.
“It creates a true powerhouse in media,” said Bakish in an interview via Bloomberg. “One of the few companies that can shape the future of the business.”
Joe Ianniello — the acting head of CBS — is going to oversee the CBS end of the business. Ianniello assumed the position after Les Moonves was ousted for inappropriate behavior. Ianniello’s contract is effective until 2021.
The negotiations for this deal accelerated in April as CBS decided to end its search for a new CEO and extend Ianniello’s contract as the interim head.
In terms of the numbers, the management team of the combined company is expecting to generate about $500 million a year in cost savings within a year or two of the deal closing. And the combined entity is valued at about $30 billion while it will have over $28 billion in sales. The costs will be reduced by cutting real estate and certain jobs.
CBS shareholders will retain 61% of the combined company and the remainder will go to Viacom investors. Each of the Viacom shares will be converted into 0.59625 of a CBS share. And the new business will also pay a modest dividend.
As part of the deal, CBS is going to receive six seats on the 13-member board and Viacom will gain 4 seats. Plus 2 seats will go to National Amusements Inc., which is the Redstone family’s investment company.
Bakish told Andrew Ross Sorkin (CNBC’s host of Squawk Box and the co-creator of “Billions” on Showtime) in an interview that CBS now has the scale of programming to effectively compete against the largest players. CBS’ content library now includes 140,000 TV episodes, 36,000 films, and 750 series. Some of the largest players in the space include
CBS and Viacom have been split for the last 13 years and there were multiple attempts to combine since then. After the merger is completed, ViacomCBS may pursue acquisitions of other media companies.
