On Tuesday, CBS and Viacom merged, reuniting the two companies that split in 2006, to create a media giant worth $30 billion.
What We Know:
- Viacom and CBS released the details of the merger Tuesday and invited people to listen in on a conference call discussing the deal. The deal’s “strategic rationale” hinges on the merged company’s ability to possess a “portfolio of powerful consumer brands,” which includes CBS, Showtime, Nickelodeon, MTV, Comedy Central and Paramount Network. The merger will also create a more global company, allowing for better global leadership positions to focus on the companies performance outside the United States.
- Bob Bakish will serve as the President and CEO of ViacomCBS Inc. with Joe Ianniello as Chairman and CEO of CBS. The companies outlined a three-part strategy going forward which includes a direct-to-consumer business model focusing on company-owned streaming sites, enhanced advertising and distribution and the creation of third-party content.
- Shari Redstone, Vice-Chairwoman of both CBS and Viacom, has been pushing for the combination of the two companies for three years but has faced opposition from the board of CBS; Redstone controlled Viacom and CBS before it split in 2006. The initial split was initiated by Redstone because Viacom was growing faster than CBS, allowing Viacom to reach its potential. Now that CBS has grown to be the most-watched television network in the country, the two companies “can realize the incredible power of their combined assets,” Redstone wrote in a statement.
- The merged media company will largely focus its energies on streaming, as the two have lost revenue in advertising but increased content popularity amongst kids, adults, African Americans, and Hispanics to consume the largest share, 22 percent, of the US TV audience. Critics speculate the merger still will not be enough to dominate monster streaming services like Netflix or even newer streaming services like Disney’s set to launch in November. Currently, Disney controls 14 percent of the US TV audience.
This deal follows other billion-dollar media deals that suggest a trend; Disney bought Fox’s entertainment business in March and AT&T bought Time Warner last year.
