After years of on-again, off-again merger talks, broadcast giant CBS Corp. and its corporate sibling Viacom Inc. on Tuesday finally agreed to reunite in a nearly $12 billion deal that will bring together such well-known brands as CBS, MTV, Nickelodeon and Showtime.
CBS, the larger of the two companies and worth $18.5 billion, will absorb the smaller Viacom, which owns such assets as BET, Comedy Central and the Paramount Pictures movie studio in Hollywood. The new company will be called ViacomCBS Inc., in a nod to the legacy of Sumner Redstone, the ailing 96-year-old media titan who built an empire from a small chain of drive-in movie theaters in the Northeast.
Viacom Chief Executive Bob Bakish will become president and chief executive of the new entity, and gain a seat on the board. Shari Redstone, the mogul’s daughter, will become the first chairwoman in Viacom’s history.
The proposed merger was widely expected, the latest in the wave of entertainment industry consolidations. It was the third time in three years that CBS and Viacom attempted to hook up.
Last year, telecommunications colossus AT&T bought HBO, CNN, TBS and the Warner Bros. studio in an $85 billion deal. In March, Walt Disney Co. completed a $71.3 billion acquisition of much of Rupert Murdoch’s Hollywood holdings.
CBS and Viacom suddenly found themselves medium-sized players, no longer leaders of the industry. But it wasn’t just a consolidating industry and splintering audiences that drove the two companies together. Both were weakened by years of internal turmoil: boardroom battles, costly lawsuits, financial miscalculations and management woes.
ViacomCBS will be worth about $32 billion.
Investors responded favorably to the news. Viacom shares closed at $29.21, up 2.4 percent while CBS shares rose 1.3 percent to $48.70.
The Redstone family, through its Massachusetts-based investment vehicle, National Amusements Inc., controls nearly 80 percent of the voting shares of the two companies. The family firm already has approved the all-stock transaction. Existing CBS shareholders will own 61 percent of the combined company, while existing Viacom shareholders will own about 39 percent. Viacom shareholders will receive 0.59625 shares of CBS stock for every Viacom share that they own. On Tuesday, Wall Street valued Viacom at about $12 billion.
The new company will be one of the largest players in TV advertising, capturing an estimated 22 percent of viewership to traditional television. That will be in the same league as Comcast Corp., which owns NBCUniversal, and ahead Walt Disney Co. Combined, the company spends more than $13 billion a year to produce content. It will have a growing presence in the streaming space and access to a library stocked with more than 140,000 television episodes and more than 3,600 movie titles.
