CBS Corporation and Viacom have entered into a definitive agreement to combine in an all-stock merger, reuniting two US-based media giants which split in 2006. The merger will reunite the CBS free-to-air broadcasting business, the Showtime pay TV network, basic cable channel brands MTV, Nickelodeon and Comedy Central, and the Paramount film and TV studios, as well as burgeoning online brands including CBS All Access and Pluto TV. Both CBS and Viacom are owned by National Amusements Inc.
The new company will be called ViacomCBS and will be headed by Bob Bakish, currently president and CEO of Viacom. This week’s merger announcement describes ViacomCBS as ‘a leading global, multiplatform, premium content company, positioned to be one of the most important content producers and providers in the world’.
IHS Markit Channels and Programming Intelligence estimates that combined revenues for the channels business of CBS and Viacom were $17.3 billion in 2018, of which 88% was generated in the US. Based on reported data, the production and distribution revenues were $7.1 billion last year.
In terms of programming expenditure, the combined global total in 2019 for CBS and Viacom is an estimated $10.2 billion. This ranks the combined ViacomCBS third in terms of programming spend behind the $18.2 billion of Walt Disney and NBCU’s $13.4 billion. Netflix’s estimated $10 billion programming spend puts it just behind the new ViacomCBS.
CBS shareholders will own approximately 61% of the combined company, with existing Viacom shareholders owning approximately 39%. National Amusements owns approximately 79% of the Class A voting shares in both CBS and Viacom. The transaction is subject to regulatory approvals and is expected to close by the end of the year.
The CBS/Viacom remerger comes in the wake of two major US combinations: Walt Disney’s acquisition of most of 21st Century Fox and AT&T’s takeover of Time Warner. While all three are slightly different in nature, they all have a common motivation: to position the company in a new media environment where viewers are watching more content online and traditional advertising and subscription-funded media are seeing their revenue model being undermined.
One of the rationales behind the split of Viacom and CBS in 2006 was a fear that the mainly advertising-funded CBS part of the business faced inevitable decline while the cable network business of Viacom would be free to grow more dynamically. But CBS has arguably proved to be a more robust business, with the flagship network leading the US national network ratings for a number of years and feeding a string of hit properties like CSI and NCIS into syndication. Viacom, meanwhile, has been particularly exposed to cord-cutting in the US and the flight of its younger audience demographic to online.