Published: Wed, August 14, 2019
Entertaiment | By Paul Elliott

CBS and Viacom agree to sign $30 billion merger deal

CBS and Viacom agree to sign $30 billion merger deal

Under an agreement, Shari Redstone agreed not to push for a reunion for at least two years, but that left open the possibility of CBS itself pushing for it. The market value of CBS about $18 billion. 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 joins Viacom properties that include cable networks MTV, Nickelodeon, and Comedy Central, as well as the Paramount TV and film studio, with CBS, which brings to the table its broadcast TV network and the Showtime cable network.

CBS and Viacom first merged together in 1999 in a deal valued then at $35.6 billion but split six years later.

Since that time, CBS stock has more than doubled in value, trading at almost $50 a share this week, while Viacom stock has stayed more or less flat, trading at almost $30 a share Tuesday.

Shari Redstone had been a big backer of re-combining the companies in the face of tough competition.

Meanwhile, the media industry has come to be dominated by entertainment and telecommunication industry giants forming ever-larger combinations.

The merger follows on the heels of other media megamergers in recent years, including AT&T acquiring Time Warner and the Walt Disney Company taking 21st Century Fox.

Create a leading producer and licensor of premium content to third-party platforms globally.

The business has said it plans to accelerate its direct-to-consumer strategy. The deal was structured as a cash-free transaction called a stock swap, with CBS shareholders owning roughly 60% of the new company. More heavily traded Class B shares of Viacom were trading up 0.7% to $28.73, but off of highs earlier in the day. "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.

The new chairwoman of the combined company is to be Shari Redstone, who controls the family's holding company, National Amusements, along with her 96-year-old father, Sumner Redstone.

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

The Redstone family media empire has been reunited after more than a decade apart.

This time around, the negotiations dragged on several days as the two sides worked out the details.

According to Bloomberg, CBS had been mulling over its next steps following the ousting of former CEO Leslie Moonves over sexual misconduct allegations. The changes paved the way for Tuesday's announcement. Disney's stock was up 1%, while Netflix was unchanged. The deal could take months to be totally finalized, but this is a move that should give the newly-named ViacomCBS a fighting chance to survive in the streaming era.

Management expects to generate $500 million a year in corporate cost savings within a year or two of the deal closing. Bob Bakish, now the president and CEO of Viacom, will lead the new company, which has combined revenues of more than $28 billion, the companies said.

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