CBS and Viacom finally completed their merger after rumors over the past few years of joining forces, and more than fourteen years after the two companies had split apart initially. The deal follows about three years of drama around the various power players involved in bringing together two large media companies in an era of increased competition in the industry.
The new company will be split 61% to CBS stockholders and 39% to Viacom stockholders, and is estimated to generate $28 billion in revenue. It will be called ViacomCBS, will integrate content from both companies into the ever-popular area of streaming with the CBS All Access application.
However, the combined company will continue to license their programs to Netflix, Amazon, and others because of the enhanced revenue that can bring to their portfolio as well. The new content library is deep and their audience reach is massive, which will serve the new company well in negotiating for advertising dollars with the Fall TV season ready to begin soon.
The new ViacomCBS can compete in the space, but is dwarfed by Netflix ($136 billion in revenue), Disney ($245 billion in revenue), and Comcast ($193 billion in revenue) and one prevailing theory is that they are positioned now to acquire another media company to keep pace with the rest of the industry.
Some media industry experts have linked the newly merger companies to potentially target AMC Networks for consolidation. Some other reports have ViacomCBS in negotiations with Sony Pictures, Lions Gate (to purchase Starz), and Discovery Networks all as potential acquisitions that would help them compete with Netflix, Disney, and Comcast.
The immediate future revolves around integrating the personnel of both companies and determine who will take on some of the responsibilities of leadership in newly structured business units as well as on the corporate level.
The flipside to this deal is that some politicians have criticized the merger saying that it will limit competition, increase price of cable, satellite or streaming services. This observation is certainly justified based on the backdrop of the AT&T merger with Time Warner which produced some of those same consumer issues. WarnerMedia, the name of the new company, had content pulled from cable providers and available only on DirecTV, which is also owned by AT&T.
This maneuver has caused trepidation whenever media companies are consolidated or merged in the current climate. The CEO of the new company is Bob Bakish, and the Chairman of CBS is Joe Ianniello and they are looking to maximize some of the advertising revenue because they reach over 20% of all television viewers, and their strategy is trying to leverage that better as a combined entity in those negotiations with advertisers and sponsors.
CBS has also an uphill climb ahead of them with the harassment claims and the multiple reports of toxic work environment claims that have made headlines in recent years. The new executive team has promised a climate of “inclusiveness” and the company has made big changes to the CBS News division naming a female to the top executive post there, and installed Norah O’Donnell as the anchor of their flagship evening news broadcast.
CBS and Viacom have so many synergies that make sense in this deal, and the hope from their executive leadership and Wall Street analysts is that this new merged entity can usher in a new chapter for CBS amidst their struggles recently. The upcoming television season and the Fall “sweeps” period will prove whether or not this merger will begin a new day at the company, or if it will remain the status quo.
(Background courtesy of Business Insider, CNN, Vox.com, and Boston Globe)