CBS to Merge With Viacom in Long-Awaited $11.7 Billion Deal
CBS Corp. agreed to merge with Viacom Inc. in an $11.7 billion transaction, capping years of on-again-off-again talks to reunite two media giants split in 2006.
The all-stock deal, announced Tuesday, combines the most-watched U.S. broadcast network with the parent of Paramount Pictures and cable channels such as MTV and Nickelodeon. It followed marathon negotiation sessions this week as the two sides hashed out a price for the long-awaited merger.
Shari Redstone, whose family controls both companies, will become chair of the combined entity. She’ll be sitting atop a media empire original assembled by TV and movie magnate Sumner Redstone, who is now 96.
Viacom Chief Executive Officer Bob Bakish will lead the business as CEO.
“We unite our complementary assets and capabilities and become one of only a few companies with the breadth and depth of content and reach to shape the future of our industry,” Bakish said in a statement.
Joe Ianniello, currently acting head of CBS, will oversee the CBS side of the business. He signed a new contract that runs into 2021, according to a Viacom representative.
With the media industry consolidating ever further into a handful of giant companies, the transaction could give the combined entity much greater clout in negotiating deals with pay-TV distributors. It also could help them spread out the cost of content purchases like sports rights over a wider swath of channels.
Management expects to generate $500 million a year in corporate cost savings within a year or two of the deal closing. The combined entity, valued at about $30 billion, will have more than $28 billion in sales.
CBS shareholders will get 61% of the combined company, called ViacomCBS Inc., with the remainder going to Viacom investors. Each Viacom share will convert into 0.59625 of a CBS share.
CBS stock climbed 1.3% to $48.63 as of 3:27 p.m. on Tuesday, with Class B shares of Viacom rising 1.7% to $29.01.
CBS will receive six seats on the 13-member board, while Viacom gets four. Another two will go to National Amusements Inc., the Redstone family’s investment company, which has said it will vote its controlling stake in favor of the deal.
The last time the companies were in merger discussions, more than a year ago, Viacom directors had agreed to take 0.6135 of a CBS share for every nonvoting share of their business, people with knowledge said at the time. The companies, using the code names “Comet” and “Venus,” had expected to save at least $1 billion by combining.
CBS shares have dropped since then. They’ve lost about 18% since the beginning of 2018, as the broadcaster faced mounting challenges, including the ongoing competition for viewers with the likes of Netflix Inc. and the ouster of longtime CEO Les Moonves.
This time around, the negotiations dragged on several days as the two sides worked out the details. The companies held round-the-clock negotiating sessions this week, according to people familiar with the talks.
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