The corporate boards of Viacom and CBS agreed to merge in an all-stock deal Tuesday, reuniting the Redstone family's entertainment holdings after a series of legal battles and corporate intrigues.
The move is intended 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.
Viacom Chief Executive Bob Bakish is to oversee the new company, which will be called ViacomCBS. The deal would combine such well-known entertainment brands as CBS and Showtime with Viacom's Paramount television and movie studios, Nickelodeon, Comedy Central and MTV.
CBS also owns the book publisher Simon & Schuster. Current CBS CEO Joe Ianiello is to oversee the former CBS properties under Bakish.
"Our unique ability to produce premium and polar content for global audiences at scale - for our platforms and for our partners around the world - will enable us to maximize our business for today, while positioning us to lead for tomorrow," Bakish said in a statement.
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 Viacom and CBS are publicly traded, they are both controlled by the family through National Amusements.
It would seem unlikely that the merger would be blocked by federal regulators or antitrust lawyers. Viacom and CBS are largely not direct competitors, and the U.S. Justice Department recently lost its challenge to the AT&T takeover of Time Warner.
Yet even if the deal goes through, and even at its new heft, the new Viacom would remain on the smaller side.
Comcast, the parent of NBC and Universal, and AT&T, after its takeover of Time Warner and CNN, each combine Hollywood firepower with critical communication services via cable and the Internet as well as digital phones and mobile phones. They are vastly larger than ViacomCBS would be.
So too is the new Disney, further bolstered by its recent acquisition of much of Fox's entertainment holdings, including the Star Wars and Marvel franchises.
Like Disney, AT&T is moving aggressively to create a new entertainment streaming service. For AT&T, the service will focus on the DC comic books superhero franchises, its HBO programs and films, as well as its cartoon and movie archives.
Yet many are watching the nation's leading digital giants with great concern. Amazon and Netflix have dipped into seemingly bottomless wallets to draw creative talent away from conventional networks and studios, encouraging Americans to sever their cable subscriptions with a wealth of new shows. Apple is also embarking on offering original television content as well (it has had paid streaming services for years).
CBS has moved on streaming more than its broadcast rivals, with a digital 24-hour news service called CBSN and a paid entertainment streaming service. That service, called CBS All Access, has enjoyed some modest success with hits such as The Good Fight and a renewal of the Star Trek franchise.
Sumner Redstone split CBS from Viacom in January 2006 in the belief it would unshackle the more profitable entertainment vehicle Viacom from the lagging, old school network television divisions of CBS. As it happened, CBS proved the more dynamic company under Les Moonves, then CEO and later chairman.
As Sumner Redstone aged, Shari Redstone had to battle with her father's former girlfriends and his executives to ensure her position. CBS, led by Moonves, fought in the boardroom and courtroom to dilute the voting stake of National Amusements to prevent her gaining control of the company. But Moonves was derailed by a sexual assault and harassment scandal, which led to his firing. (He has denied the accusations.)
With Moonves gone, the path to the reunification of the two wings of the Redstone entertainment empire was far smoother. The more pressing problem now is that the new ViacomCBS may not be big enough to hold off its rivals in Hollywood or Silicon Valley. If it does not successfuly acquire other properties, the merged company may have just made itself appealing enough to be bought by a larger player, like Amazon — which doesn't have a network — or Verizon, which lacks any major TV presence.
AILSA CHANG, HOST:
Soon, one mega entertainment company may be bringing us "Dora The Explorer," "The Daily Show" and "60 Minutes." Viacom and CBS said today that they are merging. Together, they are going to create a $30 billion giant. NPR media correspondent David Folkenflik joins us now from New York with the details.
DAVID FOLKENFLIK, BYLINE: Hey, Ailsa.
CHANG: So can you just give us a picture of what this combined CBS-Viacom behemoth will look like?
FOLKENFLIK: Yeah. From any objective standard, they got a whole lot of properties. Under the same roof, you'll have CBS network, CBS News, you'll have Showtime, the entertainment premium channel on cable, you'll have Comedy Central, BET, Nickelodeon, MTV and Paramount Pictures and television studios as well.
CHANG: Man, phew (ph). And why are these already two huge companies merging now?
FOLKENFLIK: Well, the logic behind the deal - I think the best word for it is fear. Now, executives are putting a good face on it. We heard earlier this afternoon from Viacom CEO Bob Bakish on a call with analysts this afternoon. Here's what he had to say.
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BOB BAKISH: Simply put, the combined company will be one of only a few with the breadth and depth of content and platforms and the global reach to shape the future of the industry.
FOLKENFLIK: Bakish is going to be running the combined company, which they claim is going to be called ViacomCBS. You know, that may be true. They may be one of only a few, but there are a lot of others if you think about it. Think of Disney, which, you know, has the children's franchises like "The Lion King." It's got ESPN, the ABC network, a heck of a lot more and bought a lot of Rupert Murdoch's media empire, at least the entertainment parts at Fox. Think of Homer Simpson, think of the X-Men, think of cable channels like FX. And then there's these other giants - AT&T, Comcast - these guys are a combination of entertainment properties as well as ISP and telephone providers. And then up north, Silicon Valley - look at Amazon and Netflix, even soon Apple. You've got folks that seemingly have bottomless wallets to compete against. They're paying a lot of money to draw a lot of creative talent down there. And they're just so much bigger than even this combined Viacom will be.
CHANG: Sure. I also understand there's some interesting history here - right? - like the Redstone family has controlled both of these companies at various times. What role did any family drama play into this merger?
FOLKENFLIK: There's been a lot of drama. Sumner Redstone is in his mid-90s. He's the patriarch of National Amusements, the holding company that controls both of these companies. He split them apart effective in January of 2006. He wanted to unleash what he thought was the profit to be driven by the entertainment side over at Viacom. Actually, CBS performed much better. Shari Redstone had been his presumed successor, and yet he didn't want to let go. He had to fight with his former girlfriends. He had to fight with some of his executives over at CBS in the boardrooms, in the courtrooms, to make this happen. She prevailed. And ultimately, she was able to get these two companies to agree to merge once she was able to force out Les Moonves, who was felled in a sexual harassment and assault scandal. It's important to note he denies the allegations made against him.
CHANG: Right. Do you think the federal government is going to approve this merger?
FOLKENFLIK: I think they will. I mean, they basically gave the matador defense to the Disney takeover the entertainment properties of Fox. And the Justice Department lost its challenge to try to keep off the takeover of Time Warner and its properties, including CNN, by AT&T. So I think that you're going to look - probably going to be a light touch from federal regulators as Viacom and CBS don't really compete very much at all. I think the real challenge is is this combined ViacomCBS going to be big enough to compete in the world of streamers? They say they've got a lot of content to offer, and that's true. But if you look over at Disney, if you look at AT&T-Time Warner and you look up north to Silicon Valley, there are a lot of folks that have a lot of content that they're going to have to compete against.
CHANG: That's NPR media correspondent David Folkenflik.
Thanks so much, David.
FOLKENFLIK: You bet. Transcript provided by NPR, Copyright NPR.