THE WORD IS OUT – CBS/VIACOM

The word is that CBS and Viacom have agreed to merge – a deal that has been a long time in the works.

This, at a time when the media companies are faced with serious competition from much bigger companies like AT&T, Walt Disney, Comcast.  Once merged, the deal is expected to put them on better footing to compete with stronger rivals in a business enterprise buffeted by cable TV cord-cutting and increasingly dominated by streaming (ref. WSJ).  Without a doubt, when Summer Redstone split up CBS and Viacom in 2006, he had no hint of how things would stand thirteen years later – it seemed like a good business solution at the time.  According to the Journal, the all-stock deal will create a major entertainment player valued at roughly $30 billion, combining Viacom properties such as MTV, Nickelodeon, Comedy Central and the Paramount TV and film studio with CBS’s broadcast network and Showtime premium network.  Shari Redstone, now vice chair of both companies, will become chair of the combined companies.  Bill Bakish, currently CEO of Viacom will become CEO of the combined entity and CBS acting CEO Joe Ianniello will become chairman and CEO of CBS, with control over its assets.  Under the agreement that has been drawn up, CBS will receive six seats on the 13-member board and Viacom, four.  National Amusements, under whose aegis both companies currently operate, will get two board seats and Bakish will get the remaining seat.  The collection of networks that the two companies bring together is expected to provide good leverage with pay-TV providers, many of whom have taken a harder line with TV programmers in response to cord-cutters fleeing the traditional TV bundling.  CBS has rights to air National Football League games through 2022.  And, since live sports continue to be one of the major cable TV draws, that appears to give them a major bargaining advantage.  Currently, the prime time share of viewership stacks up nicely for CBS/Viacom at 15%; with Comcast at 18%; Disney, 14%;  Discovery, 11%; Fox, 9%; AT&T, 7%, and the remainder, 26%.  Even though recent acquisitions and amalgamations have left the bigger companies like AT&T, Disney in strong positions, ViacomCBS would have a coined library of 140,000 episodes of premium TV and 3,600 film titles, and with 750 series in production, ViacomCBS would be among the top spenders on production, with over $13 billion spent over the past year.  It will definitely be interesting to see how the match-up goes; congratulations to ViacomCBS on the pending merger.

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