Published: Wed, August 14, 2019

CBS to merge with Viacom in $11.7 billion deal

CBS to merge with Viacom in $11.7 billion deal

The combined company will be one of the largest content spenders, with more than 13 billion dollars spent in the last 12 months and will be a broadcast and cable leader in key markets around the world, reaching more than 4.3 billion cumulative TV subscribers.

Viacom shareholders will receive 0.59625 CBS shares for each share they own, representing a slight premium to Viacom's closing price on Monday.

The merger was seen by both companies as a way to better compete in an entertainment business that has been racked by cord cutting and in which the move to streaming is seen as the wave of the future. The new company, which will be called ViacomCBS, brings brands like CBS and Showtime together with the likes of Nickelodeon, MTV, BET, Comedy Central and Paramount.

The two companies were long-controlled by media magnate Sumner Redstone and more recently by his daughter, Shari, through the Redstones' company, National Amusements, which owns theaters in the USA and the United Kingdom.

Joe Ianniello, president and acting CEO of CBS, will become chairman and CEO of CBS.

For example, Viacom says it will command a 22% share of all prime-time TV viewers - the largest of any US media company. What's more, ViacomCBS now boasts a catalog of more than 140,000 TV episodes and 3,600 films, a list which includes titles like Star Trek and Mission Impossible.

The new ViacomCBS will have a market capitalization of $30 billion, but that still pales in comparison to competitors like Netflix, valued at $136 billion, and Walt Disney, valued at $245 billion.

The companies said they expect the deal, which still needs to win regulatory approval and clear other conditions, will close by the end of this year.

The move is meant to enable the blended company valued at about $30 billion to fight off bulked-up competitors and a new threat from digital rivals with well-financed streaming services.

If scale is the primary driver behind the union of the CBS and Viacom assets, the long-term vision is all about gearing up for the incipient streaming battles.

"The combined company will have the best of both worlds, premium USA programming that seamlessly travels across borders and hundreds of thousands of hours of locally produced global programming, all available with the click of a button", he said. Then-CBS chief executive Les Moonves clashed with Shari Redstone over the merger, with Viacom's valuation and the combined company's leadership particular sticking points.

The troubled merger has been in talks for more than three years, with former CBS CEO Leslie Moonves taking the lead on opposing the reunification. 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. CBS's current CFO will take over as CFO for the new company. The latter was forced out in September 2018 amid accusations of sexual harassment.

CBS Corp and Viacom Inc have reached a deal to reunite media mogul Sumner Redstone's USA entertainment empire, betting that a larger company will be able to compete and partner better in a media industry dominated by giants.

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