Media powerhouses CBS and Viacom reach merger deal

Shari Redstone

Acting CBS CEO Joe Ianniello, who will head the CBS business in the combined company, said in a call with analysts that the company might add content from Nickelodeon, BET, MTV and Comedy Central to CBS All Access and Paramount movies to Showtime.

The companies said they expected about $500 million in annual synergies, or cost savings.

The blockbuster proved a bust, however, and the companies split up just a few years later, in 2005. Well, consider that Alex Kurtzman now leads Star Trek's future on CBS All Access, with Discovery, Picard, Lower Decks, the untitled Section 31 series, and another unnamed animated TV show in the works. Walt Disney Co.in March bought most of 21st Century Fox in a deal valued at $52 billion, while AT&T in June completed its acquisition of Time Warner for $85 billion. The combined company is expected to accelerate and expand its direct-to-consumer strategy through subscription and ad-supported offerings, including CBS All Access and Showtime; Pluto TV, the leading free streaming TV service in the US; and niche products such as CBSN, ET Live and Noggin.

The stocks of CBS and Viacom both rose less than 2% in afternoon trading Tuesday, a reflection of Wall Street having anticipated this deal, especially in recent days.

Companies might not make enough on subscription fees to break even, but it might not be able to get enough viewers with free services to attract enough advertising either, he said.

CBS and Viacom said Tuesday they will reunite, bringing together their networks and the Paramount movie studio as traditional media giants bulk up to challenge streaming companies like Netflix. He believed it would unlock the value of Viacom, which was broadcasting some of TV's most popular shows at a time when CBS was becoming less popular. 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. As one of the biggest premium content providers in the world, the combined company is positioned to deliver content to a diverse global customer base that includes MVPDs, broadcast and cable networks, subscription and ad-supported streaming services, mobile providers and social platforms. The companies say the combined company will have $28 billion in revenue.

The deal represents a coming together of two disparate arms of the vast media holdings owned and controlled by Sumner Redstone and his daughter, Shari - who will be the vice chair of the CBS and Viacom board of directors - under the umbrella of the privately held National Amusements.

Shari Redstone had been a big backer of re-combining the companies in the face of tough competition. CBS under longtime chief Les Moonves became more profitable and Viacom struggled, hurt by weakness in its Paramount studio and people dropping cable in favor of streaming.

But over time, the two companies' fates were reversed.

Moonves' ouster past year in the face of multiple sexual misconduct allegations changed the dynamic. Then the CBS board went through a dramatic overhaul a year ago following the departure of longtime CEO Leslie Moonves over misconduct allegations. 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. Disney's stock was up 1%, while Netflix was unchanged.

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