We’ve talked in these posts previously about the efforts of Viacom and CBS to re-merge.
The new effort is the third attempt in four years to recombine the two companies that were split in 2006 by parent company National Amusements headed at the time by Summer Redstone. During the past year, the media landscape has changed rapidly. Disney and Time Warner have both “bulked up” (ref WSJ) with megamergers. As well, the “tech giants” now absorb most of the money spent on digital advertising, and consumers have been readily discarding the pay-TV bundle in favor of streaming platforms. Thus, at this time, analysts largely agree that it’s in the best interests of CBS and Viacom to link up once again and join forces against the competition. A legal battle initiated by CBS last year jettisoned the merger talks at that time, but those have since been settled and Les Moonves, the antagonist in that instance, has rsigned. Thus, while National Amusements can’t propose a merger for two years, CBS with a two-thirds of its board member approval can do so. And, since Moonves’ departure, the CBS board has been reconstituted with nine members stepping down and six new members elected as replacements. The CBS stock lost a quarter of its value in 2018, so it seems that it’s time to look at serious revamping. The potential for aligning with other companies looks slim: Verizon has eschewed interest; AT&T is working on its merger with Time Warner, and Disney, Comcast and Fox already own broadcast networks. Thus, the merger with National Systems seems to make reasonable sense to almost everyone – now that Moonves, who was opposed, is no longer at the company. What is yet to be done is to set a price in preparation for the merger talks, and to look at who might be the most likely leader of the combined company. Bob Bakish is the CEO of Viacom and is currently seen as the most likely leader of the combined companies. Without a doubt, merging the two companies will provide them with better ways of participating in the streaming war battles with Disney and others, which are certain to heat up in 2020. The merger timing appears to be opportune – we’ll follow the action.