CBS and Viacom to Combine
Creates a leading global, multiplatform, premium content company, positioned to be one of the most important content producers and providers in the world
-- Portfolio of powerful consumer brands spanning all content categories and demographics
- Iconic library of 140,000+premium TV episodes and 3,600+ film titles
- Production capabilities across five continents, including more than 750 series ordered to or in production
- One of a few major film studios operating on a global basis
- Among the biggest content spenders in the industry, with more than $13 billion spent in the last 12 months
- Diverse and fast-growing portfolio of direct-to-consumer offerings
- Global reach of more than 4.3 billion cumulative TV subscribers in 180+ countries
- #1 share of broadcast and cable viewing across all key demographics in the U.S.
- First-choice distribution and advertising partner with industry-leading reach and capabilities
-- Delivers financial benefits that will position the combined company to create significant value for all shareholders
- Increased financial scale for significant and sustained investment in programming and innovation
- Attractive growth outlook
- EPS accretive transaction with estimated run-rate annual synergies of $500 million
- Highly cash flow generative
- Committed to maintaining an investment-grade credit rating and modest dividend payment
-- Bob Bakish to lead the combined company as President and CEO; Joe Ianniello will serve as Chairman and CEO, CBS
August 13, 2019 02:09 PM Eastern Daylight Time
NEW YORK--CBS Corp. (NYSE: CBS.A, CBS) and Viacom (NASDAQ: VIA, VIAB), two of the world’s leading entertainment companies, today announced they have entered into a definitive agreement to combine in an all-stock merger, creating a combined company with more than $28 billion in revenue.
The combined company, ViacomCBS Inc., will be a leading global, multiplatform, premium content company, with the assets, capabilities and scale to be one of the most important content producers and providers in the world. The combined company will be a scale player globally, with leadership positions in markets across the U.S., Europe, Latin America and Asia. This includes the largest television business in the U.S., with the highest share of broadcast and cable viewing across all key audience demographics, and strength in every key category, including News, Sports, General Entertainment, Pop Culture, Comedy, Music and Kids – making it a first-choice partner to distributors and advertisers. In addition, the combined company will possess a portfolio of fast-growing direct-to-consumer platforms, including both subscription and ad-supported offerings. It will also include a major Hollywood film studio, Paramount Pictures, which has been a producer and global distributor of filmed entertainment for more than a century and continues to be a global box office driver. Taken together, these distinct strengths will accelerate CBS and Viacom’s ability to deliver an array of compelling content to important and diverse audiences across both traditional and emerging platforms around the world.
Shari Redstone, Vice Chair of the Boards of Directors, CBS & Viacom, will be appointed Chair of the Board of ViacomCBS Inc. Source: Viacom
Bob Bakish, President and Chief Executive Officer, Viacom, will become President and Chief Executive Officer of the combined company. Bakish said: “Today marks an important day for CBS and Viacom, as 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. Our unique ability to produce premium and popular content for global audiences at scale – for our own platforms and for our partners around the world – will enable us to maximize our business for today, while positioning us to lead for years to come. As we look to the future, I couldn’t be more excited about the opportunities ahead for the combined company and all of our stakeholders – including consumers, the creative community, commercial partners, employees and, of course, our shareholders.”
Joe Ianniello, President and Acting Chief Executive Officer, CBS, will become Chairman and CEO of CBS. Ianniello, who will oversee all CBS-branded assets in his new role, said: “This merger brings an exciting new set of opportunities to both companies. At CBS, we have outstanding momentum right now – creatively and operationally – and Viacom’s portfolio will help accelerate that progress. I look forward to all we will do together as we build on our ongoing success. And personally, I am pleased to remain focused on CBS’s top priority – continuing our transformation into a global, multiplatform, premium content company.”
Shari Redstone, Vice Chair of the Boards of Directors, CBS and Viacom, said: “I am really excited to see these two great companies come together so that they can realize the incredible power of their combined assets. My father once said ‘content is king,’ and never has that been more true than today. Through CBS and Viacom’s shared passion for premium content and innovation, we will establish a world-class, multiplatform media organization that is well-positioned for growth in a rapidly transforming industry. Led by a talented leadership team that is excited by the future, ViacomCBS’s success will be underpinned by a commitment to strong values and a culture that empowers our exceptional people at all levels of the organization.”
Bob Bakish, President & CEO, Viacom will become President & CEO of ViacomCBS Inc. Source: Viacom
Strategic Rationale
-- Premium content at scale. The combined company will possess a portfolio of powerful consumer brands, including CBS, Showtime, Nickelodeon, MTV, BET, Comedy Central and Paramount Network, as well as one of the largest libraries of iconic intellectual property, spanning every key genre and addressing consumers of all ages and demographics. This library comprises 140,000+ TV episodes and 3,600+ film titles, and reunites fan-favorite franchises such as Star Trek and Mission: Impossible. The combined company will also have more than 750 series currently ordered to or in production. In addition, it will include a major Hollywood film studio, Paramount Pictures, which creates and distributes feature-length entertainment around the world. The combined company will also be one of the largest content spenders, with more than $13 billion spent in the last 12 months.
Joe Ianniello, President & Acting CEO, CBS, will become Chairman & CEO of CBS, overseeing CBS-branded assets. Source: CBS Corporation
-- Global leadership positions. The combined company will be a broadcast and cable leader in key markets around the world, reaching more than 4.3 billion cumulative TV subscribers. In the U.S., the combined company’s portfolio of broadcast, premium and cable networks will have the highest share of viewing on television among key audiences, including Kids, African Americans and Hispanic viewers. In addition, the combined company will operate strong broadcast networks in the UK, Argentina and Australia, as well as pay-TV networks across more than 180 countries. It will also have significant global production capabilities across five continents – creating content in 45 languages.
-- Powerful, three-part strategy for growth. In a quickly evolving media landscape, the combined company will benefit from its distinct competitive position as one of the most important global content providers – for its own platforms as well as for third parties. This will enable the combined company to accelerate the growth of its direct-to-consumer strategy, enhance distribution and advertising opportunities and create a leading producer and licensor of premium content to third-party platforms globally.
- 1. Accelerate direct-to-consumer strategy. Together, the combined company will be positioned to accelerate and expand its direct-to-consumer strategy through its proven and diverse portfolio of both subscription and ad-supported offerings. These include CBS All Access and Showtime, which deliver premium, branded content live and on demand to millions of subscribers; Pluto TV, the leading free streaming TV service in the U.S.; and niche products such as CBSN, ET Live and Noggin. It also has an opportunity to expand globally by leveraging its existing strength in both subscription and ad-supported offerings, combined library, content production capabilities and international infrastructure.
- 2. Enhance distribution and advertising opportunities. The breadth and depth of the combined company’s reach across both traditional and new platforms – including 22% of U.S. TV viewership – will drive important new distribution and advertising opportunities. For distributors, this includes forming more expansive and multifaceted relationships, and applying the benefit of retransmission consent across a combined portfolio. For advertisers and agencies, the combined company will provide industry-leading reach through a variety of formats, including a portfolio of differentiated advanced advertising and marketing solutions, such as CBS Interactive, Viacom Vantage and Viacom Velocity, which will be applied against significant, expanded inventory across the portfolio.
- 3. Create a leading producer and licensor of premium content to third-party platforms globally. As one of the biggest premium content providers in the world, the combined company is positioned to deliver content to a diverse global customer base that includes MVPDs, broadcast and cable networks, subscription and ad-supported streaming services, mobile providers and social platforms. Notably, in addition to content licensing, CBS and Viacom are developing must-watch programming for a broad range of third-party networks and platforms to feed significant demand for original, premium content.
-- Significant value for all shareholders. The combined company will have an attractive growth outlook and increased financial scale with substantial free cash flow, which will enable significant and sustained investment in programming and innovation, as well as support the combined company’s commitment to maintaining a modest dividend payment. The transaction will be EPS accretive and is expected to deliver an estimated $500 million in annualized run-rate synergies within 12-24 months following closing, with additional strategic benefits. With one of the strongest balance sheets in the industry, the combined company will benefit from a solid investment grade rating.
Leadership, Governance and Transaction Terms
In addition to Bakish and Ianniello, the leadership team of the combined company will include Christina Spade as EVP and Chief Financial Officer; and Christa D’Alimonte as EVP, General Counsel and Secretary.
The Board of Directors will consist of 13 members: six independent members from CBS, four independent members from Viacom, the President and CEO of ViacomCBS and two National Amusements, Inc. (NAI) designees. Shari Redstone will be appointed Chair.
The merger agreement was approved by the Boards of Directors of both CBS and Viacom by unanimous vote of those present, upon the unanimous recommendations of the Special Committees of the CBS and Viacom Boards of Directors, respectively. Existing CBS shareholders will own approximately 61% of the combined company and existing Viacom shareholders will own approximately 39% of the combined company on a fully diluted basis. Under the terms of the merger agreement, each Viacom Class A voting share and Viacom Class B non-voting share will convert into 0.59625 of a Class A voting share and Class B non-voting share of CBS, respectively.
NAI, which holds approximately 78.9% and 79.8% of the Class A voting shares of CBS and Viacom, respectively, has agreed to deliver consents sufficient to assure approval of the transaction. More than two-thirds of the CBS directors unaffiliated with NAI (and all of those unaffiliated directors who voted on the transaction) have approved the transaction, as required in order to permit NAI to consent to the transaction under the terms of the 2018 settlement agreement entered into among CBS, NAI and certain other parties thereto.
The transaction is subject to regulatory approvals and other customary closing conditions. It is expected to close by the 2019 calendar year end.
The Special Committee of CBS’s Board of Directors is being advised by Centerview Partners LLC and Lazard Frères & Co. LLC as its financial advisors and by Paul, Weiss, Rifkind, Wharton & Garrison LLP as its legal counsel. The Special Committee of Viacom’s Board of Directors is being advised by LionTree Advisors LLC and Morgan Stanley & Co. LLC as its financial advisors and by Cravath, Swaine & Moore LLP as its legal counsel. Viacom is being advised by Shearman & Sterling LLP. NAI is being advised by Evercore as its financial advisor and by Cleary Gottlieb Steen & Hamilton LLP as its legal counsel.
Investor Call Details
CBS and Viacom will host a conference call with investors at 4:30 p.m. (ET) on August 13, 2019 to discuss this announcement.
A live audio webcast of the call will be available on the Investors homepage of CBS’s website (investors.cbscorporation.com) and Viacom’s website (ir.viacom.com). The conference call can also be accessed by dialing 1 (877) 451-6152 (domestic) or 1 (201) 389-0879 (international). Please call five minutes in advance to ensure you are connected prior to the call.
An audio replay of the call will be available beginning at 7:30 p.m. (ET) on August 13, 2019 in the Investor Calendar section of CBS’s corporate website and in the Events, Webcasts & Annual Meetings section of Viacom’s Investors home page, and at 1 (844) 512-2921 (domestic) and 1 (412) 317-6671 (international) using PIN number 13693788.
The announcement press release and other information related to the announcement will be accessible on CBS and Viacom’s websites.
About CBS
CBS Corporation (NYSE: CBS.A and CBS) is a mass media company that creates and distributes industry-leading content across a variety of platforms to audiences around the world. The Company has businesses with origins that date back to the dawn of the broadcasting age as well as new ventures that operate on the leading edge of media. CBS owns the most-watched television network in the U.S. and one of the world’s largest libraries of entertainment content, making its brand –"the Eye” – one of the most-recognized in business. The Company’s operations span virtually every field of media and entertainment, including cable, publishing, local TV, film and interactive. CBS’ businesses include CBS Television Network, The CW (a joint venture between CBS Corporation and Warner Bros. Entertainment), Network 10 Australia, CBS Television Studios, CBS Global Distribution Group, CBS Consumer Products, CBS Home Entertainment, CBS Interactive, CBS All Access, the Company’s direct-to-consumer digital streaming subscription service, CBS Sports Network, CBS Films, Showtime Networks, Pop, Smithsonian Networks, Simon & Schuster, CBS Television Stations and CBS Experiences. For more information, go to http://www.cbscorporation.com.
About Viacom
Viacom creates entertainment experiences that drive conversation and culture around the world. Through television, film, digital media, live events, merchandise and solutions, its brands connect with diverse, young and young at heart audiences in more than 180 countries.
For more information on Viacom and its businesses, visit http://www.Viacom.com. Keep up with Viacom news by following it on Twitter (twitter.com/Viacom), Facebook (facebook.com/Viacom) and LinkedIn (linkedin.com/company/Viacom).
Important Information About the Transaction and Where To Find It
In connection with the proposed transaction, CBS and Viacom will file with the Securities and Exchange Commission (“SEC”) a registration statement on Form S-4 that will include a joint consent solicitation statement of CBS and Viacom and that will also constitute a prospectus of CBS. CBS and Viacom may also file other documents with the SEC regarding the proposed transaction. This document is not a substitute for the joint consent solicitation statement/prospectus or registration statement or any other document which CBS or Viacom may file with the SEC. INVESTORS AND SECURITY HOLDERS OF CBS AND VIACOM ARE URGED TO READ THE REGISTRATION STATEMENT, WHICH WILL INCLUDE THE JOINT CONSENT SOLICITATION STATEMENT/PROSPECTUS, AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND RELATED MATTERS. Investors and security holders may obtain free copies of the registration statement on Form S-4 (when available), which will include the joint consent solicitation statement/prospectus, and other documents filed with the SEC by CBS and Viacom through the website maintained by the SEC at www.sec.gov or by contacting the investor relations department of CBS (+1-212-975-4321 or +1-877-227-0787; investorrelations@CBS.com) or Viacom (+1-212-846-6700 or +1-800-516-4399; investor.relations@Viacom.com).
Participants in the Solicitation
CBS and Viacom and their respective directors and executive officers may be deemed to be participants in the solicitation of consents in respect of the proposed transaction. Information regarding CBS’ directors and executive officers, including a description of their direct interests, by security holdings or otherwise, is contained in CBS’ Form 10-K for the fiscal year ended December 31, 2018 and its proxy statement filed on April 12, 2019, both of which are filed with the SEC. Information regarding Viacom’s directors and executive officers, including a description of their direct interests, by security holdings or otherwise, is contained in Viacom’s Form 10-K for the fiscal year ended September 30, 2018 and its proxy statement filed on January 25, 2019, both of which are filed with the SEC. A more complete description and information regarding directors and executive officers will be included in the registration statement on Form S-4 or other documents filed with the SEC when they become available. These documents (when available) may be obtained free of charge from the SEC’s website at www.sec.gov.
No Offer or Solicitation
This communication is for informational purposes only and is not intended to and does not constitute an offer to subscribe for, buy or sell, or the solicitation of an offer to subscribe for, buy or sell, or an invitation to subscribe for, buy or sell any securities or a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, invitation, sale or solicitation would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and otherwise in accordance with applicable law.
Cautionary Notes on Forward-Looking Statements
This communication contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In this context, forward-looking statements often address expected future business and financial performance and financial condition, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “may,” “target,” similar expressions and variations or negatives of these words. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements about the consummation of the proposed transaction and the anticipated benefits thereof. These and other forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements, including the failure to consummate the proposed transaction or to make any filing or take other action required to consummate such transaction in a timely matter or at all. Important risk factors that may cause such a difference include, but are not limited to: (i) the proposed transaction may not be completed on anticipated terms and timing, (ii) a condition to closing of the transaction may not be satisfied, including obtaining regulatory approvals, (iii) the anticipated tax treatment of the transaction may not be obtained, (iv) the potential impact of unforeseen liabilities, future capital expenditures, revenues, costs, expenses, earnings, synergies, economic performance, indebtedness, financial condition and losses on the future prospects, business and management strategies for the management, expansion and growth of the combined business after the consummation of the transactions, (v) potential litigation relating to the proposed transaction that could be instituted against CBS, Viacom or their respective directors, (vi) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the transactions, (vii) any negative effects of the announcement, pendency or consummation of the transactions on the market price of CBS’ or Viacom’s common stock and on CBS’ or Viacom’s operating results, (viii) risks associated with third party contracts containing consent and/or other provisions that may be triggered by the proposed transaction, (ix) the risks and costs associated with the integration of, and the ability of CBS and Viacom to integrate, the businesses successfully and to achieve anticipated synergies, (x) the risk that disruptions from the proposed transaction will harm CBS’ or Viacom’s business, including current plans and operations, (xi) the ability of CBS or Viacom to retain and hire key personnel and uncertainties arising from leadership changes, (xii) legislative, regulatory and economic developments, (xiii) the other risks described in CBS’ and Viacom’s most recent annual reports on Form 10-K and quarterly reports on Form 10-Q, and (xiv) management’s response to any of the aforementioned factors.
These risks, as well as other risks associated with the proposed transaction, will be more fully discussed in the joint consent solicitation statement/prospectus that will be included in the registration statement on Form S-4 that will be filed with the SEC in connection with the proposed transaction. While the list of factors presented here is, and the list of factors to be presented in the registration statement on Form S-4 are, considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on CBS’ or Viacom’s consolidated financial condition, results of operations, credit rating or liquidity. Neither CBS nor Viacom assumes any obligation to publicly provide revisions or updates to any forward looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.
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Update (10/17) - From Variety:
CBS-Viacom Merger Details Revealed, Shares to Trade on Nasdaq
Negotiations between CBS and Viacom went down to the wire on the day the long-gestating transaction was finally sealed on Aug. 13.
CBS Corp. and Viacom revealed the timeline of the merger talks in a Securities and Exchange Commission filing on Thursday that runs more than 650 pages. Also Thursday, CBS and Viacom said the shares of the newly minted ViacomCBS will trade on the Nasdaq market, where Viacom shares have been listed since December 2011. CBS at present is listed on the New York Stock Exchange.
The filing offers details of the wrangling between the boards of CBS and Viacom, and with the controlling shareholder in both companies, the Redstone family’s National Amusements Inc. (NAI). When CBS and Viacom fielded competing proposals for the combined company’s moniker, it was NAI that settled on ViacomCBS. ViacomCBS shares will trade under the ticker symbol VIACA (for the preferred shares largely held by NAI) and VIAC (for the common shares). The combined company will take a cue from CBS in having a fiscal year that ends Dec. 31 rather than on Sept. 30 as has been the norm for Viacom.
The filing sheds light on the sticking points in the negotiations that heated up in earnest in June. Viacom president-CEO Bob Bakish had an audition of sorts with the CBS board of directors before they agreed on Viacom’s push that he be named ViacomCBS CEO. CBS’ acting CEO Joseph Ianniello had multiple meetings with Shari Redstone, who is set to become chair of ViacomCBS, prior to accepting the CBS board’s demand that Ianniello have a “significant” executive role in the combined company.
The disclosure also reveals that Viacom dropped its asking price five times between Aug. 2 and Aug. 12, the day the sides agreed on a stock exchange ratio of 0.5965 shares of CBS for every Viacom share held. CBS’ board was insistent that the deal value Viacom at or near its market cap at the time of the transaction. The deal unveiled Aug. 13 values Viacom at around $12.5 billion-$13 billion.
The long list of board meetings and huddles with a raft of financial advisers — Centerview and Lazard for CBS, LionTree and Morgan Stanley for Viacom — was documented in great detail because of the potential for litigation around the merger. The board members of both companies have every incentive to demonstrate that outside bankers and lawyers were on hand to review every step.
CBS and Viacom had two previous fitful attempts at merger discussions in 2016 and early 2018, but in both cases, corporate drama derailed Redstone’s desire to see the two halves of her family’s media empire reunited. CBS and Viacom were brought together by her father, Sumner Redstone, in 2000, and split up into separate entities again as of January 2006.
The picture changed in September 2018 after longtime CBS chairman-CEO Leslie Moonves was ousted as allegations of sexual misconduct in his past surfaced. That came four months after Moonves went to war with Shari Redstone over control of CBS, filing a lawsuit that argued she was breaching her fiduciary duty to other CBS shareholders by pushing for the CBS-Viacom deal. After Moonves was forced out, Ianniello was named acting CEO.
Moonves’ ouster also coincided with the departures of six other CBS board members. From September to November of 2018, according to the filing, the newly reconstituted CBS board had four meetings with CBS senior managers to review company operations and allow the new board members to become familiar with the broadcast giant.
The filing makes note that those four meetings did not include discussions of “strategic alternatives” — aka M&A options.
On Jan. 22, Ianniello and newly appointed chief financial officer Christina Spade presented a long-range business plan to the board and engaged “in-depth discussion” about the proposal. At that time, the board approved the first year of that plan as CBS’ marching orders for 2019.
Nine days later, the CBS board met with advisers at Lazard and Centerview to hear their view of the changing media landscape and CBS’ long-term prospects.
By February, the CBS board was ready to take bigger steps toward positioning the Eye for the future. On Feb. 21 and March 9, CBS board members met to discuss “specific potential acquisition or merger opportunities within the media industry,” according to the filing. The board decided to “further evaluate” the potential of a re-combination with Viacom.
On March 25, Ianniello had his second meeting with Shari Redstone. Ianniello reiterated his belief that there was merit to a CBS-Viacom integration, if the price and other conditions were right. Those were important conciliatory moves for the CBS chief because he had been a top lieutenant to Moonves since 2006 and he was closely associated with the bold effort to sue NAI and Redstone in 2018.
On April 4, CBS board members meet again with Centerview, Lazard and lawyers from the Paul Weiss firm. Shari Redstone and Robert Klieger, a CBS board member designated by NAI, skip the session because of their conflicting ties to NAI.
The outside advisers tell the CBS board that the timing is bad for CBS to be an acquisition target because the likeliest buyers — none are named but the list presumably included AT&T, Comcast and Disney — were already preoccupied with other acquisition deals. Also, the advisers noted that a CBS deal with an entity other than Viacom would bring regulatory scrutiny, whereas the CBS-Viacom deal is expected to have a much smoother regulatory review because the companies already share a common parent company in NAI.
On April 7, the CBS board creates a four-person special committee of eight independent directors: Candace Beinecke, Barbara Byrne, Linda Griego, Martha Minow, Susan Schuman, Gary Countryman, Brian Goldner and Frederick Terrell.
The filming makes the point that the CBS special committee “was also empowered to determine at any time not to pursue the potential transaction with Viacom and to terminate CBS’ consideration thereof.”
Four days later, Bakish and Ianniello have their first discussion about a possible merger, with the blessing of both boards. On April 17, CBS and Viacom executives sign a non-disclosure agreement regarding the merger discussions. On April 26, Viacom’s short-term financial forecasts are shared with the CBS board. By May 10, senior executives from both companies met “to discuss potential synergies that could be achieved.”
June was a busy month of meetings and due diligence for the boards and senior executives of both companies. Viacom board members raise concerns among themselves about the economic terms of the deal. CBS gave every signal that it was in favor of the deal but only at a price. The CBS board felt the premium for Viacom shares was already baked in to the company’s stock price.
NAI stayed out of those discussions although the filing notes that Redstone did “from time to time state that the exchange ratio should be fair to shareholders of both companies.”
Around this time, CBS floated an offer to buy the Starz premium cable channel group from Lionsgate for $5 billion. The CBS board members agreed among themselves that Starz (described as “Company A” in the filing) was not an alternative to a Viacom transaction but rather a supplement.
Also at this time, the CBS board began to have specific discussions about the fate of Bakish and Ianniello. Viacom and NAI made it clear they both favored Bakish in the CEO role.
The first stirrings of economic considerations appear in June, with the Viacom board suggesting that the exchange ratio of 0.61, which had been tentatively agreed on during the spring 2018 talks, should be the minimum floor price in discussions. CBS did not agree.
In late June, Bakish and Ianniello have multiple meetings to discuss senior management decisions and CBS’ “rumored” interest in Starz.
On July 8, Bakish gets his closeup with a meeting with four CBS directors: Beinecke, Byrne, Goldner and Terrell. The group discussed Bakish’s “vision and strategic views for the combined company and his viewers with respect to the composition of the senior management team.”
Bakish and Ianniello have more meetings in July. The discussion of the combined company name comes up. The sides also differ on proposals for the board structure of ViacomCBS. Viacom proposes 15 directors while CBS lobbies for 12. The final decision split the difference at 13.
Also in July, the CBS board is explicit in demanding a role for Ianniello at CBS “to provide a sense of continuity and stability for CBS employees.”
On July 30 Viacom proposes an exchange ratio of 0.63. Two days later, Bakish meets with CBS CFO Christina Spade to discuss assembling a blended corporate management team.
By Aug. 2, the question of management and the company name was settled. But the CBS special committee told its Viacom counterpart that the 0.63 exchange ratio was a non-starter and they needed to come back with something “closer to where the CBS special committee would be willing to transact.”
The next day, Viacom drops its asking price to 0.615. On Aug. 5, Viacom shaves the price down to 0.6125 while CBS raises its offer to 0.5625. At this point, the talks are put on hold while both companies report quarterly earnings on Aug. 8.
The back-and-forth resumes on Aug. 11. The CBS special committee tells Viacom that it will only consider an exchange ratio that is under 0.60. After what sounds like a marathon day of board meetings, CBS and Viacom authorize their respective bankers to haggle over the exchange ratio. Viacom returns with an offer of 0.6064, which is quickly trimmed to 0.604, and finally to the magic number of 0.5965. CBS accepts that figure on Aug.12.
On Aug. 12-13, there’s last-minute wrangling over some open points on new contracts for key CBS executives. The back and forth between the boards persists on Aug. 13, the day the merger agreement was announced after the market close.
The shadow of the earlier fights over the merger still hangs over the boardrooms. As part of the merger agreement, NAI expressly committed to making no changes to the ViacomCBS board until the second anniversary of the deal closing. It also agreed to maintain a board that is majority controlled by independent directors that are not affiliated with NAI. And it agreed to have an open mind about a potential acquisition of ViacomCBS, should a suitor come forward. As described in the filing, NAI is obligated to give “good faith consideration to any business combination or other strategic alternative involving ViacomCBS that the Unaffiliated Independent Directors determine may be in the best interests of ViacomCBS and its stockholders.”
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Older posts:
Update (8/30) - CBS (NYSE: CBS.A, CBS) and Viacom (NASDAQ: VIAB, VIA) have jointly announced that Julia Phelps has been named Executive Vice President, Chief Communications and Corporate Marketing Officer of ViacomCBS, effective upon closing of the deal to combine CBS and Viacom. Phelps will report to Bob Bakish, President and Chief Executive Officer, Viacom, who will serve as President and Chief Executive Officer of ViacomCBS upon close.
As Executive Vice President, Chief Communications and Corporate Marketing Officer, Phelps will lead the combined company’s Corporate Communications, Corporate Marketing, Corporate Responsibility, Special Events and Internal Creative teams.
“Julia has been a vital force in shaping and communicating Viacom’s strategy, and revitalizing its vibrant culture and dynamic, entrepreneurial spirit,” said Bakish. “Her leadership and skill in communicating and driving change will be invaluable as we bring together the talented teams of CBS and Viacom.”
The appointment of Phelps follows yesterday’s announcement of Anthony DiClemente as Executive Vice President, Investor Relations, ViacomCBS, effective upon close.
“Julia and Anthony are both highly experienced executives who have contributed significantly to the respective success of Viacom and CBS. I look forward to working with both of them, drawing on their insights and expertise, as we pursue a powerful growth strategy anchored in ViacomCBS’s position as one of the most important content producers and providers in the world,” said Bakish.
Phelps has served as Executive Vice President, Communications, Culture and Marketing, Viacom since April 2017. During this time, she has overseen a variety of important initiatives, including the development and roll out of Viacom’s corporate mission, vision and values; the global launch of Spark, a next-generation town hall to equip and engage employees; and Generation Change, a global platform designed to elevate and empower young people who drive change around the world. Before that, Phelps served as Executive Vice President of Communications at Viacom International Media Networks (VIMN), where she led VIMN's internal and external communications efforts for Viacom's international brands, including MTV, Nickelodeon, Comedy Central, BET, Paramount Channel, VH1, COLORS and Channel 5. Previously, she served as Senior Vice President of Corporate Communications for VIMN and as VP of Corporate Communications for Viacom. Phelps first joined Viacom in 2005 from New York based agency DeVries Public Relations. A native of Canada, Phelps earned a B.A. in Political Science from the University of Victoria in British Columbia, and an M.S. in Strategic Communications from Columbia University.
The combination remains subject to regulatory approvals and other customary closing conditions. It is expected to close by the 2019 calendar year end.
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From Bloomberg:
After Years of Battle, Shari Redstone Runs an Empire of Her Own
- She cements her status as most powerful woman in U.S. media
- CBS, Viacom still face streaming and cord-cutting challenges
She and her billionaire father went to war but she returned to the fold when she thought two of his ex-girlfriends were taking the old man for millions. She dispensed with two CEOs who mutinied against the family and took control of two media giants in the process.
Now Shari Redstone is poised to cement her position as the most powerful woman in media. Move over, Oprah.
With the merger of CBS Corp. and Viacom Inc., announced Tuesday, the 65-year-old Redstone will control the voting stock and chair the newly combined company, to be called ViacomCBS. That’s after spending 13 years playing second fiddle to others as vice chair of both.
While women increasingly are overseeing media companies, none chairs one as big as the rejoined CBS and Viacom, whose combined sales last year were $27.4 billion.
“You have to give Shari a lot of credit, for having a point of view, a strategic vision and executing on that very carefully,” said Jessica Reif Ehrlich, an analyst at Bank of America Merrill Lynch. “She had some amazing hurdles and she’s gotten over all of them.”
The $11.7 billion merger reunites CBS, the most-watched TV network in the U.S., with the parent of MTV, Nickelodeon and Paramount Pictures. Her father, media mogul Sumner Redstone, had separated the two in 2006 because he thought the market was undervaluing the cable-TV networks due to the slower-growing broadcast business. CBS, however, proved to be the better investment.
For at least three years, Shari Redstone has sought to put the companies back together, believing that the combination will provide more leverage to negotiate with TV distributors and bring enough scale to compete with newly enlarged industry giants such as AT&T Inc. and Walt Disney Co.
Long before that, in 2007, she publicly fell out with Sumner, now 96, owner of 80% of the family holding company, National Amusements Inc., through which he controlled Viacom and CBS. She’s also had to contend with strong-willed chief executives who stood in her way, such as Viacom’s Philippe Dauman, a onetime confidant of her father’s, and CBS’s Les Moonves, considered one of the most powerful men in the industry until his fall from grace last year after accusations of sexual misconduct.
Marty Kaplan, a professor of media studies at the University of Southern California, said Shari Redstone’s rise in a media company still recovering from the Moonves scandal could serve as inspiration for others.
“Having a woman at the top should lead to more diversity in hiring,” he said. “If you’re a male senior manager, you might want to double-check that you’re including a diverse slate of talent” writing the scripts and directing the shows, he said.
Shari Redstone has already been exerting her influence at Viacom. She pushed for Bob Bakish, formerly head of the international division, to lead that company. Now he’s set to take the reins of the combined businesses and will join the board. Acting CBS chief Joe Ianniello, considered a Moonves loyalist, is staying on as CBS chairman and CEO but reporting to Bakish.
Despite her differences with her father -- he once released a letter saying she made “little or no contribution” to the companies -- she has clearly learned a thing or two about business and fortitude from her dad. He is famous for his court battles and family scuffles. He’s bought out family members, including his brother Edward and his only other child, Brent.
But Shari Redstone has managed to hang on to her 20% stake in the family business. When an unflattering 2015 Vanity Fair profile highlighted her father’s declining health and influence of two of his girlfriends, she stepped in and ultimately took control of her father’s affairs. After his death, she’ll assume his place on a family trust that oversees their holdings.
For many years now, she’s run Advancit Capital, a venture-capital firm based in Norwood, Massachusetts. Her interests, besides her favorite team, the New England Patriots pro-football franchise, have been new-media ventures. Advancit, for example, recently invested in podcast network Wondery Inc. Redstone has said she enjoys listening to shows such as “CBS Evening News” and “Face the Nation” through that medium.
Jonathan Miller, who works with Shari as a senior adviser at Advancit, said the firm has also been investing in businesses that have subscription-based models, such as Headspace Inc., a meditation app, and MasterClass, which offers online lessons from sports and other celebrities. She’s also granted more interviews and appeared at industry conferences, recognizing her own need to take a leadership role, Miller said. “She feels company culture and corporate governance are very important.”
With her new status, she won’t be able to pin any decline in the company’s performance on others. CBS and Viacom are under pressure from the challenges that all traditional media companies face in a streaming era. These include customers canceling cable-TV packages and spending more time watching subscription services such as Netflix.
Paramount Pictures, Viacom’s film studio and a beloved holding of both Redstones, has struggled to develop hits. Last weekend, “Dora and the Lost City of Gold,” a live-action film based on Nickelodeon’s long-running kids’ show, finished a disappointing fourth at the box office.
Many believe Shari Redstone will ultimately sell the combined CBS-Viacom to a larger telecommunications or technology business, after squeezing hundred of millions of dollars in cost savings from the merger.
“It’s still a $30 billion company dealing with $1 trillion companies that want content,” said Porter Bibb, a long time adviser with Media Tech Partners in New York.
Given Shari Redstone’s tenacious climb to the top, it would be unwise to underestimate her.
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From CNN Business:
Viacom and CBS reunion likely marks first step into new frontier
Los Angeles (CNN Business)When mogul Sumner Redstone impulsively split Viacom (VIA) and CBS (CBS) into two companies 13 years ago, the rationale was that it would unlock value in each -- creating "Via-Grow," a robust cable-based entity, and "Via-Slow," with CBS as the steady tortoise to its corporate sibling's hare.
It never made much sense. But now as Redstone's daughter, Shari, recombines the two -- seeking what amounts to "Via-Scale" -- to weather the streaming wars to come, this trip back to the altar appears to be a little too late to achieve the desired ends.
The original positioning of Viacom as a cradle-to-grave advertising-supported giant -- from Nickelodeon, MTV and Comedy Central for kids, teens and young adults through CBS and Showtime for their parents and grandparents -- had considerable logic to it. The joint company also possessed clear synergies: Showtime, which ended up going with CBS in the divorce, had a need for movies that Paramount, which stayed with Viacom, could provide. (The two have labored to fill those voids in the intervening years at great cost.)
Now, however, the state of play in the entertainment industry has changed. As ridiculous as it sounds to say about a company that boasts $28 billion in combined revenue, the merged Viacom-CBS still looks to be on the runty side compared with the likes of Disney (DIS) (especially since it swallowed much of Fox) and Comcast (CCZ), as well as Netflix (NFLX), Amazon (AMZN) and Apple (AAPL).
Reuniting the CBS and Viacom assets does provide certain advantages, and CBS has already taken steps into the digital present by launching CBS All Access, using signature properties, most notably "Star Trek," as a foundation.
Even so, the bulked-up ViacomCBS Inc. appears to be in need of another deal to put itself on a footing to genuinely compete, without being overrun by the handful of titans currently holding sway.
Paramount, for one, has been a laggard in theatrical box-office share -- at 5% year to date, per Boxofficemojo.com. And the combination of cable channels -- which in the past was all about establishing leverage with content distributors -- comes as the cable bundle is under significant stress, with cord-cutting and the shift toward a more a la carte, subscription-based world.
In that environment, the value of many of Viacom's second-tier channels, such as TV Land and CMT, is more suspect. While CBS and Paramount possess a vast library of movies and TV shows, they'll be seeking to exploit them at a time when deep-pocketed tech companies and the few existing Hollywood giants have more formidable arsenals and resources.
Put another way, Nickelodeon and "Star Trek" might be nice, but they have a long way to go in terms of matching the Disney and "Star Wars" brands, and perhaps even WarnerMedia's animated characters and DC Comics.
When the idea of reuniting Viacom and CBS began percolating, it also carried with it the prospect of placing control under then-CBS chief Leslie Moonves, at the time one of the highest-profile executives in the industry. Moonves' exit from CBS last September didn't leave the cupboard bare in terms of management, but nobody within the combined entity possesses a profile that can rival the one he once enjoyed with Wall Street, advertisers and Hollywood.
There's no way of knowing where Viacom would be today had its corporate path not forked when it did, but the long road to meeting up again doesn't look like a fairy-tale ending; rather, the reunion simply looks like the first step -- to reference one of those aforementioned assets -- into an uncertain media frontier.
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From The Streamable:
ViacomCBS Says CBS Content Coming to Pluto TV, Nickelodeon Likely to CBS All Access
CBS and Viacom are together once again. The companies were previously merged in 1999, but split in 2006 thinking they would grow faster as separate entities. Now, the companies have entered into a definitive agreement to combine the companies by the end of the year under the ViacomCBS brand.
Both companies hope the deal will help continue to accelerate the growth of their direct-to-consumer streaming platforms — including CBS All Access, Showtime, and Pluto TV — and niche services like Noggin, CBSN, ET Live, and the upcoming BET+.
On today’s call, ViacomCBS CEO Bob Bakish reiterated that CBS content will come to Pluto TV, which would likely begin with the addition of CBS Sports HQ and ET Live.
One of the big opportunities ahead is to bring more kids programming to CBS All Access. Last week, the company announced they will be adding 1,000 hours of kids programming to CBS All Access later this year, but Ianello says that with Nickelodeon, “well now, we have the number one (kids) brand in the world.”
In terms of timing of the company taking advantage of their newly combined assets, Bakish said, “there is nothing at all preventing us from moving forward in terms of beginning to unlock that opportunity in the near future.”
When asked if customers should expect a change in price for CBS All Access the company reiterated that they are focused on growth. The newly named Chairman and CEO of CBS, Joe Ianello said “We want to make sure it is competitively priced. So we’re going to continue to drive subscribers, but clearly the value proposition for under $10 live linear programming.”
In February, CBS disclosed that they had surpassed 8 million direct-to-consumer subscribers of CBS All Access and Showtime. The company originally projected that it would take another two years to reach that number of subscribers. The company has now set a new goal to reach 25 million domestic subscribers of both of their OTT services by 2022.
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From Deadline:
CBS And Viacom Finally Re-Tie The Knot, Merging After 13 Years As Separate Companies
Ending years of fitful discussions that played out against a backdrop of operatic corporate drama and media industry consolidation, CBS and Viacom have finally agreed to merge. The deal reunites them and pools assets such as Paramount Pictures, CBS, Showtime and MTV in a new entity to be called ViacomCBS Inc. after 13 years of the two operating in largely separate media domains.
Under the all-stock deal, Viacom shareholders will get 0.59625 CBS shares for each non-voting share they own, which is an exchange ratio a bit below Viacom’s closing price last Friday. Regulatory approval of the merger is expected in the next several months.
The fair market value of the tie-up as of today is about $30 billion. The combined annual revenue of the new company is $28 billion.
Bob Bakish, who has guided Viacom’s progress since taking over as CEO in 2016, will lead the combined entity as president and CEO. Joe Ianniello, interim CEO of CBS since September 2018, will stay on as chairman and CEO of CBS, overseeing all CBS assets.
Christina Spade, who had been CFO of CBS since last fall, will be EVP and Chief Financial Officer; and Christa D’Alimonte will be EVP, General Counsel and Secretary.
The new company’s board of directors will have 13 members. Six will be independent members from CBS, four will be independent members from Viacom, another will be the president and CEO of ViacomCBS and two will be picked by National Amusements (NAI), the longtime controlling shareholder of CBS and Viacom. NAI chief Shari Redstone will be board chair. Strauss Zelnick, who had been interim chair, announced months ago he did not intend to stay in the mix beyond his interim tenure.
For Redstone, the deal is a vindication of her instinct to reunite the companies and comes after a lengthy period of difficulty at each company and at times with her father, Sumner Redstone. Now 96 and in failing health, Redstone retains the title of chairman emeritus of the empire he built from a handful of Massachusetts movie theaters.
The younger Redstone now occupies a rare position of power and equity ownership for a woman in the entertainment industry.
“I am really excited to see these two great companies come together so that they can realize the incredible power of their combined assets,” she said in the official announcement. “My father once said ‘content is king,’ and never has that been more true than today. Through CBS and Viacom’s shared passion for premium content and innovation, we will establish a world-class, multiplatform media organization that is well-positioned for growth in a rapidly transforming industry. Led by a talented leadership team that is excited by the future, ViacomCBS’s success will be underpinned by a commitment to strong values and a culture that empowers our exceptional people at all levels of the organization.”
“Today marks an important day for CBS and Viacom, as 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. “Our unique ability to produce premium and popular content for global audiences at scale – for our own platforms and for our partners around the world – will enable us to maximize our business for today, while positioning us to lead for years to come.”
Ianniello said the merger “brings an exciting new set of opportunities to both companies. At CBS, we have outstanding momentum right now – creatively and operationally – and Viacom’s portfolio will help accelerate that progress. I look forward to all we will do together as we build on our ongoing success. And personally, I am pleased to remain focused on CBS’s top priority – continuing our transformation into a global, multiplatform, premium content company.”
The transaction combines assets of the 92-year-old CBS, including its flagship broadcast network, local TV stations, premium network Showtime and publishing house Simon & Schuster, with Viacom’s Paramount Pictures, MTV and Nickelodeon. As the streaming wars intensify between traditional media and tech giants Netflix and Amazon, the combined CBS-Viacom offers a notable mix of subscription and advertising-supported streaming services. CBS launched CBS All Access and Showtime’s over-the-top (OTT) platforms in 2015. Earlier this year, Viacom acquired Pluto TV, a leading ad-supported VOD service.
The drumbeat had been getting louder for a merger in recent weeks, and the conditions for an amicable arrangement proved more favorable. The boards of both companies held talks through last weekend in a final push. Fresh perspective may have helped: Most members of the CBS board joined as directors in the past year, disrupting years of stasis as the company sought to reset its culture and direction in the wake of former CEO Les Moonves’ ouster. The longtime mogul left under a dark cloud after allegations of sexual assault and harassment by more than a dozen women.
The two companies have held three rounds of formal merger talks in recent years, but the last two efforts ran aground because Moonves objected to the management structure and other issues. Tensions had grown between Moonves and Shari Redstone over the control of the company by National Amusements and NAI’s efforts to, in his view, force a stronger company to be tied to a weaker one, boiling over in the spring of 2018. CBS sued NAI, which responded with a lawsuit of its own. The case resulted in a settlement at the time of Moonves’ exit. The settlement banned NAI from initiating merger talks for two years, but did not prevent the individual companies from doing so.
CBS and Viacom split up in 2006, under the theory that more value would be unlocked by “freeing” Viacom from the then-sluggish, broadcast-heavy CBS shares. The roles soon reversed, however, with CBS riding its top-rated broadcast network, surging Showtime and growing distribution and licensing revenue to become the better-performing of the two stocks. Viacom’s cable-heavy set of assets, which minted money from the 1980s to the 2000s, began to hit turbulence this decade. Streaming, YouTube and social media carved into linear viewing of its once-invincible networks, hurting ad sales. Bakish’s predecessor, Philippe Dauman, took an extremely hard line with pay-TV operators, alienating many and jeopardizing carriage fees. One large cable company, Suddenlink (now part of Altice USA), balked at Viacom’s terms and kept its channels off its systems for two years.
Sumner Redstone, who once ran National Amusements with an iron hand, was succeeded by his daughter, Shari, several years ago and has been in poor health. Shari Redstone spoke out early and often in favor of bringing the companies back together and has also pursued talks with other companies who could, in turn, roll up a combined Viacom and CBS. That may well still be the plan, according to insiders, and rollups of smaller independents such as Lionsgate or MGM also are possibilities.
In the short term, the focus will be on integration and financial efficiencies. In Tuesday’s announcement, the company said it anticipates $500 million in cost savings from the deal, a figure that is notably less than the targets of mega-deals like Disney-Fox and AT&T-Time Warner. Accordingly, the CBS-Viacom combination is not likely to result in deep job cuts, though there is now overlap in many administrative areas.
Here is a timeline of key moments in the history of CBS and Viacom:
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From Deadline:
CBS And Viacom Streaming Assets Offer Potent Blend Of Subscriptions And Advertising
As media giants gird for battle with Netflix and Amazon, CBS and Viacom continue to pursue marginally more patient streaming strategies, gaining steady ground without spending their way into trouble.
Now, as the companies prepare finally to consummate a merger that has been many years in the making, they stand to become a bulked-up media player with arguably the industry’s most diversified streaming portfolio. Disney and WarnerMedia have bigger footprints and are taking riskier swings, and Apple remains a tantalizing mystery, but CBS-Viacom would be streaming’s biggest dual threat. Its emergence, assuming the merger deal gets done, also coincides with a counterintuitive uptick for traditional TV advertising.
Viacom has eschewed streaming (save for a marquee BET-branded service launching this fall and Noggin, a long-established preschool outlet) and placed a bet big on free, ad-supported streaming. CBS also has a collection of free, ad-backed outlets spanning news, sports and entertainment, but it has made the most waves with its twin subscription services CBS All Access and Showtime — each of which launched ahead of the subscription curve in 2015.
Advertising video on demand, or AVOD, has been more in vogue of late thanks to the boom in smart-TV penetration and the general shift toward streaming. Beyond the top echelon of media companies, Sony Crackle this year got a reboot in a joint venture with AVOD specialist Chicken Soup for the Soul Entertainment. Startup Tubi TV projected spending upward of $100 million on content to meet surging tune-in. The trend should accelerate through 2020 and beyond. NBCUniversal is planning a major AVOD launch in April, and WarnerMedia says some form of advertising will come to its HBO Max service after the subscription version gets off the ground in the spring.
Results of the efforts by CBS and Viacom, meanwhile, haven’t exactly vaulted the companies into parity with Netflix, but they have been solid and steady. CBS has repeatedly upped its forecasts for All Access and Showtime, saying they will combine for 25 million subscribers by 2022. (While CBS generally doesn’t provide a breakdown of how many subscribers there are on each platform, executives have said in recent months that it tends to be roughly an even split.)
Viacom has stayed mostly in the ad zone because it wants to leverage its networks’ decades of expertise as well as some newly integrated ad-tech tools. The company’s main vehicle for this is Pluto TV, which reached 18 million monthly active users by the end of July, up 50% from January, the month that Viacom paid $340 million to acquire it. Featuring a version of the pay-TV bundle’s on-screen schedule grid, the streaming service offers more than 100 networks, including versions of many Viacom channels designed to approximate what paying customers get the traditional way.
Michael Nathanson, a veteran media analyst with MoffettNathanson, factored streaming into his research note Friday sizing up the merger’s benefits. “The combination of CBS-Viacom will create the second largest player in U.S. TV advertising” (after Comcast), he wrote, “with strong linear reach and a growing digital footprint.” Plugging Paramount films and Nickelodeon programming into All Access in the future, he continued, should “reduce churn, drive more usage, and improve the price to value offerings.”
Bigger also is better in terms of reducing costs and offering talent another destination, he said. “CBS’ and Paramount’s production asset will quickly move up the ranks to challenge the big boys of Disney, Comcast, AT&T and Netflix and will be an attractive home for creative talent,” Nathanson argues.
“We believe its going to be a hybrid world out there with AVOD and SVOD offers combined,” observes Gideon Gilboa, SVP Media and Telecom Product and Marketing for Kaltura, a provider of streaming platform technology for Viacom, HBO, Turner and other clients. “The streaming platforms of the future will have to be super aggregators, and CBS and Viacom will have a head start.”
Indeed, many dealmakers have begun to make noise about the dominance of pure tech companies like Netflix and Amazon, which have traditionally not offered much, if any, back-end participation. Steeped in traditional TV deals, CBS and Viacom could take back some momentum, in the way that Disney and WarnerMedia have started to persuade agents and talent that they offer more options.
All Access, which was took shape at the hand of digital veteran Jim Lanzone and his team at CBS Interactive, also is a unique offering in that it blends live TV with on-demand fare. Last week, CBS dramatically expanded its initial forays in New York and Los Angeles with live, local station streams to more than a dozen additional markets. That live dimension could give Viacom, for example, interesting ways to amplify awards telecasts like MTV’s VMAs. (Last weekend’s middling Teen Choice Awards numbers certainly would have benefited from extra reach.)
CBS, meanwhile, has used its top-viewed broadcast network to cross-promote All Access at events like February’s Super Bowl and aired streaming spinoff The Good Fight on the linear network as another form of a teaser. Jo Ann Ross, the company’s chief ad revenue officer, said on the company’s quarterly earnings call Thursday that “over-the-top” (OTT) and linear platforms are gaining potency as they blend. “As a leader in OTT, she said we’re seeing a greater share of premium video budgets than ever before, whether it’s on CBS All Access or CBS.com or several of our other platforms,” she said. Big Tech, ironically, is a major ad category, with Google, Apple and others all pouring dollars into TV and streaming spots. Disney has said it will target a host of ways to advertise the launch of Disney+, including on rival broadcast and digital platforms.
Viacom CEO Bob Bakish, who is expected to take the reins of the combined company as CEO, was asked last Thursday on the company’s earnings call with Wall Street analysts about his view of the November 12 launch of Disney+. There has “certainly [been] a lot of discussion on this, and their pricing does look very competitive,” he said. “Our view continues to be that the consumer market is segmenting by price points, from big basic to skinny bundles to SVOD to free and there will be movement across those segments both up and down. And there will be bundling benefits in some of those segments, particularly with broadband and video bundles.”
The strategy at Viacom — and what should be ever more the case post-merger — “is to play in all the segments from big bundle to free and our evolving product lines allowing to do just that,” he added. “So, we feel good about that in the shifting landscape.”
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From Deadline:
CBS’ Joe Ianniello Loses Oversight Of Showtime & Pop TV To Viacom’s Bob Bakish In Merger Chess Moves; David Nevins Serves Two Kings, For Now
Joe Ianniello might be the new chairman and CEO of CBS as part of the new ViacomCBS, but the longtime executive has ceded some Showtime territory to big boss Bob Bakish as Viacom and the home of Blue Bloods hooked up again after a 13-year break. The move leaves David Nevins now answering to two kings, at least for the immediate future.
Under the structure of the newly reunited ViacomCBS Inc, once acting CBS CEO Ianniello will run the CBS unit of the parent company, which is valued at about $30 billion. However, with speculation that Ianniello will likely only be around until his recently extended contract expires at year’s end and the deal is approved by regulators, it is a carved-up CBS, to put it mildly. A source familiar with the situation noted Ianniello’s contract has been extended through 2021, but conceded many details of the new organizational structure have yet to be ironed out.
Officially, Ianniello “will oversee all CBS-branded assets in his new role,” according to the uber-release that went out this morning confirming the long-anticipated melding of the two companies. Put bluntly, that means the former Moonves-era CFO has lost oversight of prestigious premium cabler Showtime, Pop TV, Smithsonian Channel and publisher Simon & Schuster. In a further sign of Ianniello’s slipping authority under the new regime that Shari Redstone has planned for years, he no longer will have domain over ad sales and distribution – or, as one source put it with knife in hand, “his bread and butter.”
The exec publicly surrendered part of the kingdom he hoped to inherit in a memo circulated to staff in the past hour.
“As for our esteemed colleagues at Simon & Schuster and Showtime, your divisions will report to Bob when the deal closes, working under the inspired leadership of Carolyn Reidy and David Nevins – who will also continue to work with me overseeing entertainment programming for CBS, CBS TV Studios and CBS All Access,” Ianniello wrote.
As for the ambitious Nevins, quickly promoted by Ianniello to a new creative-overlord role when the latter took over on an interim basis from the disgraced Moonves, his future looks bright but mixed. Straddling Bakish and Ianniello corporately, the CBS chief creative officer and Showtime CEO will have to slice up his tasks even more as the cabler comes to the home of BET, Comedy Central and, in another dish on Bakish’s table, Pop TV.
The move of ad-supported cable network Pop from CBS to Viacom’s expansive basic cable network group is not surprising, reuniting Pop president Brad Schwartz with Bakish. Years ago, Schwartz ran MTV Canada for Bakish who was president of MTV Networks International.
As Nevins is integrated into the Viacom mix, he’ll be working with key brand chiefs including Brian Robbins at Nickelodeon (the AwesomenessTV founder replaced longtime network boss Cyma Zarghami last fall) and Chris McCarthy, who heads networks including MTV and VH1 and has been an executive on the rise.
Ad sales is another area where the integration could get interesting. Jo Ann Ross, chief ad revenue officer for CBS, has been at the company 27 years and oversees a juggernaut that has consistently increased sales despite disruption to linear viewing. That success was sometimes overshadowed by the drama around Moonves’ exit; Ross publicly stuck up for her longtime boss as a mentor who treated her fairly, though she went on to say she was “sad” and “troubled” by the allegations from several women against Moonves, adding that their voices “need to be heard.”
At Viacom, Sean Moran is a 24-year company veteran who was promoted to the top job in 2016. Working closely with Bakish, he has engineered a turnaround that has seen Viacom’s formerly lagging cable networks this most recent quarter post their first year-over-year gain in revenue since 2014.
At Disney and NBCUniversal, two companies with a mix of broadcast, cable and digital assets, a single executive oversees the entire portfolio – not so much at ViacomCBS Inc, for now.
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From Deadline:
Viacom-CBS Merger: Read The Memos From Bob Bakish And Joe Ianniello
Cementing the long-awaited merger of CBS and Viacom, the heads of each company, Bob Bakish at Viacom and Joe Ianniello at CBS, conveyed the news to their troops without sugarcoating the “challenges” of uniting two large organizations.
Ending years of on-again, off-again discussions, the companies said Tuesday they are officially coming together in a new entity to be known as ViacomCBS. Regulators will still need to bless the combination, which will result in a company with a market value of about $30 billion. Still further M&A could be undertaken to be sure the company can keep pace with media giants several times larger, to say nothing of deep-pocketed tech firms.
Both Bakish and Ianniello joined the company in the 1990s and worked there when it was under a single roof (from 2000 to 2006), but the media landscape has changed substantially in the years since.
For CBS, the changing of the guard after 13 years as a solo enterprise, is a significant milestone in a 92-year corporate saga. Viacom’s roots are more tangled, though the company was incorporated under its current name in 1970. The 1980s was a key decade for Viacom, which bought MTV and Nickelodeon in 1984 and then saw Sumner Redstone enter the scene via his exhibition chain National Amusements in 1986.
Here’s Bakish’s memo today:
"Team –
I’m writing today to share some big news. We just announced an agreement to merge with CBS, bringing together our two great companies to create a leading global, multiplatform, premium content powerhouse.
This merger comes with a lot of expectation, but it also comes with what I believe is a rare and exciting opportunity. Together, we have the opportunity to be one of the few companies positioned to shape the future of the entertainment industry.
With this agreement, we bring together the most storied studio in Hollywood, a portfolio of brands that have shaped culture for nearly four decades, a broadcast powerhouse rightfully called “The Tiffany Network,” a major force in consumer publishing with Simon & Schuster, and Showtime, a premium brand that consistently pushes the boundaries of storytelling. Between us, we also boast one of the most innovative, diversified collections of digital assets in the industry. Make no mistake, together we aren’t just bigger – we are much, much better.
Our combined company – which will be called ViacomCBS – will have a library of content with incredible breadth and depth, and a reinforced capability to produce premium and popular content at scale. We’ll have greater reach, strengthening our position with advertising and distribution partners. We will have an extended portfolio of direct-to-consumer products — both ad-supported and subscription-based — that will accelerate our growth. And we’ll be able to build on our leadership positions in the US, UK, Australia, Argentina and India for continued global expansion.
Very importantly to me, CBS and Viacom are also a great fit. The CBS team is incredibly talented, with distinct expertise that has propelled the company’s continued leadership in broadcast, D2C and beyond. And, both of our companies share a passion for creating premium content and a commitment to innovating through a rapidly shifting media landscape.
I’m honored to say that I will be leading the combined company as President and CEO. Christa D’Alimonte will serve as EVP, General Counsel and Secretary. Christina Spade, who is currently EVP and CFO of CBS, will serve as EVP and CFO of the combined company. Joe Ianniello – currently President and Acting CEO of CBS – will serve as Chairman and CEO of CBS, overseeing the CBS-branded assets.
Combining our companies will be a joint effort. Over time, we expect there will be opportunities to bring our teams together with our peers at CBS, so we can begin identifying ways to work together and learn from each other.
In short, I’m very excited to begin working with CBS. Together, we can better maximize our business today, while ensuring we lead the industry tomorrow.
This is a big step forward for all of us, and I’m so grateful for all you’ve done to get us here. Despite changes in our company and the industry — as well as the continued speculation of a potential merger — you’ve focused. You’ve executed. And, you’ve delivered, which makes us a much stronger company than we were just a few years ago. I’m hoping you can maintain similar focus and determination in the months ahead as we work to close the transaction.
One change we already know will happen is that Wade Davis will depart in connection with the closing of the transaction, as we’ve determined there isn’t a senior operating role at the corporate level of the merged company that would be consistent with the full breadth of his experience, expertise and the scope of his current role at Viacom.
Wade has been one of Viacom’s most vocal and passionate champions, playing a critical role for the company in helping to develop and successfully execute our strategy to evolve Viacom for the future. In addition to managing our global financial functions, corporate development, investor relations, data science and technology services, over the past two years he has spearheaded important strategic growth initiatives, including most recently the creation of Advanced Marketing Solutions, which was the engine that retuned us to Domestic Ad Sales growth, as well as the acquisition, integration and management of Pluto TV, which helped us establish a leadership position in the DTC marketplace. We’re so grateful for his many contributions, and that he’ll be with us through the closing of the deal.
Throughout the process ahead, I promise to be as accessible and transparent as I can, starting with a Bob Live tomorrow, where I’ll give you an overview of the merger and answer any questions you may have.
I can’t wait to speak with you then. In the meantime, please check out the press release below for further details, and thank you again for all your hard work in getting us to this very important milestone.
Best,
Bob"
Here’s Ianniello’s memo:
"Dear Colleagues –
CBS is entering a new era today, announcing a merger with Viacom that bolsters our premium content portfolio and positions us for an even better future. As we all know, there is a race to create more of the best content. We are already leaders in this regard, and today’s news will accelerate our global ambitions.
We are merging at a time when the possibilities for premium content companies are greater than ever. Viacom owns terrific brands – Paramount, Nickelodeon, BET, MTV, Comedy Central and many others – that will complement ours and offer innovative ways to reach a whole new set of viewers. You can read more about the benefits of the deal in this press release.
When we finalize the merger, Viacom CEO Bob Bakish will become the President and CEO of the combined company, and I will become the Chairman and CEO of CBS. Bob and I will ensure a smooth and steady integration of our two great companies.
I am proud that I will continue to lead CBS, responsible for overseeing all of our CBS-branded businesses. I love CBS like you do, and I’m pleased to remain a steward of it along with our great team.
The new ViacomCBS will include corporate representation from both management teams, including our Chief Financial Officer, Chris Spade, who will become ViacomCBS’ CFO.
Together, we will build upon our success in Entertainment, News and Sports with the #1 television network, a prolific studio that produces more and more hit programming for outlets across the industry, an interactive division that operates CBS All Access and is a top-10 digital property in the U.S., a syndication arm that has eight of the top 10 first-run shows on television, and a local media business that has 28 television stations in the country’s major markets. As for our esteemed colleagues at Simon & Schuster and Showtime, your divisions will report to Bob when the deal closes, working under the inspired leadership of Carolyn Reidy and David Nevins – who will also continue to work with me overseeing entertainment programming for CBS, CBS TV Studios and CBS All Access.
CBS was founded on the principle of great content. This is something that will not change. In fact, our announcement today is structured in part to make certain that our tradition of excellence will remain an integral part of our future. And so in my role I’ll be “keeping my Eye on the Eye”…working with you to ensure that the rich heritage of CBS remains central to everything we do…and that CBS continues to thrive as it has magnificently for more than 90 years.
Of course, our best and strongest asset is our people, and we will continue to prioritize investing in you. We’ve accomplished so much on that front recently, and I assure you that our ongoing commitment to a positive, diverse and inclusive workplace will remain a key priority.
It’s important to note that the vast majority of you will continue to excel in your current roles. And while all of us will experience some change, including new challenges and opportunities, I want you to know that each and every one of you is a crucial component of our success, and we value your contributions every day.
It’s also important to remember that the process of combining our two companies won’t happen overnight, and the closing of this merger is likely several months away. I know that many of you will have questions, and they will be addressed in the upcoming weeks and months.
In the meantime, you should all have confidence that today’s announcement will put us in a decidedly better competitive position to succeed in the years ahead. As always, you have my appreciation and respect for the creativity, dedication and loyalty that you bring to your job every day. You are CBS.
Joe"
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From Deadline:
‘Star Trek’ Poised To Become New Marvel? CBS & Viacom Merger Brings Franchise Under One Fleet
The introduction of Mr. Spock last season on the sleek CBS All Access series Star Trek: Discovery may be the first in many new frontiers for the fabled franchise now that the Paramount-owning Viacom and CBS are boldly going toward corporate reunification.
Taking a page from the now Fox-expanded Disney book, new ViacomCBS kingpin Bob Bakish made very clear just now on today’s investor call that the Star Trek and the Mission Impossible franchises have significant potential to leverage “across all the companies’ platforms.” Soon-to-be CBS CEO Joe Ianniello hit the drum hard himself when he added with an international angle that “scale is becoming more and more important all the time.”
With no lingering licensing barriers, the lucrative property created by Gene Roddenberry is now under one ownership for the first time since Star Trek: Enterprise came to an end in 2005. It was, of course, the very next year that CBS and Viacom were split off into two separate companies. Up until the latest big screen Star Trek offering from Paramount seemed to go into suspended animation last year, CBS Studios were not initially able to use characters on their All Access shows that could also appear in the movies.
As CBS All Access heads towards launching the much hyped Star Trek: Picard next year, the Trekverse may now be poised for an intensified expansion. Already in the pipeline are multiple animated series, more short films, and a Michelle Yeoh-led Discovery spinoff, and at Comic-Con International the Trek braintrust was openly hinting about the possibilities of a Mr Spock series starring Ethan Peck (grandson of Gregory Peck).
The new multi-platform possibilities of corporate upsizing may mean Trek could soon be making a giant leap in its aspirations, not unlike the one in the 1980s and 1990s that elevated Star Wars from a blockbuster film franchise to the ubiquitous, wall-to-wall cultural force that it represents today. As we all know, money has a way of enhancing a proposition. In that vein, the Star Trek braintrust has already acknowledged that the animation push is viewed as a way to enhance the brand’s toy business and to win the hearts, minds and allowance money of kids – another page from a now Disney-owned that Lucasfilm used to masterful effect to build fan allegiance for characters that weren’t in the original film trilogy.
While it may not be the Marvel Universe just yet, the greater Trekverse has the potential to eventually rival the Disney-own comic giant in both legacy and currency – especially with Shari Redstone’s developing strategy of creating a great global footprint. The challenge will be creating a wider pantheon of recognizable characters that goes beyond the familiar core of Picard, Spock, Kirk, Dr. McCoy, Lt. Uhura, Lt. Commander Data, Lt. Commander Worf, and about a dozen others.
Trek fans will be enthused to hear about the expanding frontiers but the news won’t yet . quite stir the kind of excitement that the Disney-Fox headline evoked from Marvel fans. That’s because Marvel’s characters had been scattered across Hollywood by years of one-off deals that created the cinematic equivalent of a superhero diaspora (Spider-Man at Sony, the X-Men and the Fantastic Four at Fox, Blade at New Line, etc.) That’s not the case with Trek, which has been far more cohesive in its canon and more historically adept at crossovers.
At this very early stage, we hear that Trek will fall under the fiefdom of the David Stapf-run CBS Studios — as we await who truly rules what and whether a fourth Star Trek movie in the latest reboot round is truly coming in an R-rated form from Quentin Tarantino or another imported auteur.
As shareholders and fan boys and fan girls know, the upside franchise possibilities of Viacom and CBS latest remarriage aren’t restricted to Federation space, either.
Star Trek: Discovery and Jordan Peele’s The Twilight Zone are already the linchpin franchises for CBS All-Acccess and it’s not hard to envision a small-screen revival for Paramount’s Mission: Impossible, another classic 1960s brand that naturally lends itself to episodic television. That revival could be especially enticing for a modern show with a budget for stunt work, make-up effects, and CG spectacle — all aspects of the brand’s film successes.
A little history: The original Mission: Impossible was created by Bruce Geller as an espionage procedural that aired from 1966 to 1973. The brand was brought back to television (along with original star Peter Graves) for a 1988-1990 updating of the concept, which follows the high-risk, geo-political adventures of the IMF, a covert team of highly specialized spies.
Under the Paramount banner, the IMF is bigger than ever.
Tom Cruise has starred as Ethan Hunt in six Mission: Impossible films since director Brian DePalma first brought the spy saga to the big-screen in 1996. Heading toward its 25th anniversary, the feature film series is aging quite well — the most recent installment, last year’s Mission: Impossible Fallout, earned $790 million worldwide, which makes it Cruise’s highest-grossing film ever (albeit that’s a ranking that does not include adjustments to account for inflation).
Also intriguing to consider: The Paramount library also includes the powerhouse Transformers franchise (with six feature films to date and close to $5 billion in worldwide box office) as well as major-league animated properties from DreamWorks (Shrek, How to Train Your Dragon, Kung Fu Panda) and the studio’s own homegrown animation hit, the Oscar-winning western Rango.
Or as Jean-Luc Picard would say: Engage!
###
From Deadline:
ViacomCBS Chief Bob Bakish Tells Investors Merger Removes “A Big Uncertainty”
Investors long ago factored in the expected reunion of CBS and Viacom to their valuation of the companies’ stock prices, so Wall Street’s reaction to the confirmation of the merger was understandably muted. CBS gained a bit less than 2% to finish the day at $48.81, while Viacom also climbed nearly 2% to close at $29.05.
Nevertheless, Bob Bakish, the Viacom CEO who will become CEO of ViacomCBS once the merger closes, stressed during a 40-minute investor call Tuesday that the reality of the deal transforms the operating environment. “It takes a big uncertainty off the company, which has been an overhang,” Bakish said. Both companies, he added, enter the marriage on an upswing. “One of the benefits is going to be the financial shape that we’re going to be in,” Bakish said. In one of the call’s many bursts of polysyllabic exuberance, he anointed the merged entity a “very strong, global, multiplatform premium content company.”
CBS and Viacom are “two companies that don’t just share a common heritage but a common culture,” he said. “Together, we will do more than we could on our own. But it’s bigger than that because all of our stakeholders will benefit.”
Bakish was asked about a common theme of investor and media speculation — whether ViacomCBS will continue to pursue deals to increase scale. CBS held talks with Lionsgate about acquiring Starz, but talks broke off over price. Bakish did not address Starz but he said the plan will be to remain opportunistic. “Both of us continue to look at opportunities in the marketplace,” he said. “That’s something we are going to continue to do.” In terms of near-term needs, he added, “I don’t think there are any gaps per se.”
One M&A scenario, which did not come up on the call, is ViacomCBS in turn being acquired by a larger player seeking to fortify themselves against Disney, Comcast and AT&T, to say nothing of tech giants disrupting the entertainment game.
Executives said they expected the transaction to close by the end of 2019, subject to regulatory approval.
Joe Ianniello, the acting CEO of CBS who will remain in the new role of chairman and CEO of CBS, opened his scripted remarks on the call by saying he had gone back to study the expected benefits of the 1999 merger of CBS and Viacom. “I was amazed by how many of them apply today,” he said.
“As we recombine, I look forward to the ways we will continue to grow these companies in a world where scale gets more and more important all the time,” he added. Addressing his new role, which emphasizes oversight of the CBS network, stations and digital platforms while surrendering oversight of Showtime, Pop TV, Smithsonian and publisher Simon & Schuster to Bakish, he said, “I am excited to get even closer to the CBS operations I care so much about.”
Bakish, in a line seemingly designed to emphasize harmony in the new C-suite, noted that he and Ianniello have known each other as colleagues “for 20 years.”
Ianniello said affiliate revenue, direct-to-consumer opportunities with CBS All Access and Showtime as well as combined TV advertising are the three main drivers of the merger. “The reason to do this deal is that there are tremendous revenue synergies,” he said. Together, CBS and Viacom account for 22% of U.S. TV viewership, but collect just 11% of TV revenue. “That leaves significant upside we should be going after,” Ianniello said.
Bakish, who rose through the ranks on the international front at Viacom before becoming CEO in 2016, said the template for incorporating CBS and part-owned CW broadcast assets had been established before. He cited deals like adding broadcasters Channel 5 in the UK and Telefe in Argentina to the company’s pay-cable holdings. “I look at the U.S. as that on steroids,” he said.
Plugging Paramount-owned content into CBS All-Access represents a clear opportunity from the merger, he said. Asked if that would take time to execute, he said, “There’s nothing at all preventing us from moving forward with that opportunity in the very near future. … There’s some low-hanging fruit there that we will start to pick quite soon.”
###
From Variety:
A Reunited CBS and Viacom Will Mark the End of a Four-Year Battle for Shari Redstone
The mission is nearly complete.
It’s taken almost four years, but Shari Redstone has doggedly removed every obstacle that stood in the way of implementing her vision for the media empire assembled by her father, Sumner Redstone, 96, over the last half-century.
The long-simmering deal to reunite CBS Corp. and Viacom under the same corporate umbrella has been the elusive last step that is finally believed to be in Redstone’s grasp. Negotiations between the boards accelerated late last week, paving the way for a formal announcement expected this week. Shari Redstone, 65, is poised to become chairman of the combined company, the throne once occupied by her father. Her ascent would make her the only woman among the elite ranks of media moguls with iron-clad control of an entertainment-focused conglomerate. She joins Mary Pickford, a co-founder of United Artists, and Lucille Ball, whose Desilu banner bought RKO in 1957, on the short list of women who have had ownership stakes in major Hollywood studios.
Redstone has proven herself a formidable strategist, regardless of gender.
She may have been born to privilege as Sumner Redstone’s daughter, but no one can say that she didn’t have to fight her way to the top.
“She will be a powerful leader who isn’t afraid to use her power,” predicts Erik Gordon, a professor at University of Michigan’s Ross School of Business. “This is a person who is willing to fight with boxing gloves or with bare knuckles.” Gordon adds that Redstone’s triumph in bringing CBS and Viacom together makes her a potent symbol for a different era of leadership. Redstone previously served as vice chair of the CBS and Viacom boards and remains president of National Amusements, the holding company for the Redstone family’s 80% controlling interest in Viacom and CBS Corp.
“I think she will be as tough and as calculating as any male chairman we have seen,” Gordon says. “Nobody should underestimate what she’s capable of.”
Shari Redstone’s quest to realign the family business began in earnest in October 2015, when she took charge of her ailing father’s affairs. She spearheaded a coordinated strike with lawyers and Sumner Redstone’s household staff to eject her father’s former girlfriend turned live-in companion, Manuela Herzer, from his home in the ritzy Beverly Park estates.
Shari Redstone has maintained in legal filings that Herzer sought to manipulate her father, at the expense of his health, into giving her money and assets. Herzer countered that Sumner Redstone had made it clear that he did not want his daughter calling the shots in his personal life or at his companies.
Shari Redstone’s move sparked a lawsuit from Herzer that opened a Pandora’s box for all those in the Redstone orbit. In the storm of litigation that followed, Shari Redstone was not spared as details of her strained family relationships emerged, along with tabloid-worthy details of her father’s unconventional life as a lion in winter.
The lawsuit from Herzer led to pressure to have Sumner Redstone’s mental competency evaluated by professionals. Those questions, in turn, reached the boardrooms at CBS Corp. and Viacom, where Sumner Redstone still served as chairman at the time. He was ousted by shareholders of the two companies in 2006.
Sumner Redstone bought CBS Corp. in 2000 and merged it with Viacom, the owner of MTV, Nickelodeon and other cable channels, which National Amusements acquired in 1987. But when Viacom’s share price slumped in 2005, Redstone decided the answer was to split the companies into separate entities again, albeit still under his control. The reunion of Viacom and CBS will likely be completed on a much speedier timeline than typical media megamergers because the companies are viewed by the Securities and Exchange Commission and other regulators as already having common ownership.
Shari Redstone’s litigation with Herzer presaged bitter public legal battles with former Viacom CEO Philippe Dauman and another longtime Sumner Redstone confidant, attorney George Abrams over control of her father’s estate. Within months, Dauman and Abrams were out of their positions of power on the Redstone trust and the National Amusements board. Dauman was also forced to resign as CEO of Viacom, and the board that had staunchly backed Dauman despite the company’s poor performance was overhauled.
In 2018, CBS Corp. went to war with Shari Redstone, accusing her of breaching her fiduciary duty to shareholders by trying to force a merger with Viacom. The CBS regime, then led by CEO Leslie Moonves, saw the re-merger scenario as an attempted rescue mission that would hurt CBS in the long run. But once again, after a few months of battle, Moonves was the one to blink, when his position was undermined by sexual misconduct allegations from his past that surfaced in a New Yorker exposé. Moonves was ultimately fired, and the CBS board was reconstituted last September.
Getting CBS and Viacom back to the altar has been an epic journey for Shari Redstone. But now that she is getting ready to take on the chairman role, the next chapter has already started. The enlarged company, to be led by Viacom CEO Bob Bakish, still has to do battle in an unpredictable marketplace against larger rivals.
###
From Variety:
CBS, Viacom Reach Long-Awaited Merger Agreement to Reunite
Bob Bakish heads ViacomCBS as CEO, Joe Ianniello to run CBS units, Shari Redstone becomes chairman
After days of marathon negotiating sessions, CBS Corp. has reached an agreement to acquire Viacom, marking the latest twist in the saga of the media giants first brought together by Sumner Redstone in 1999.
The enlarged company will take taken on the moniker ViacomCBS Inc. The all-stock deal values Viacom at right around its current market cap of $11.7 billion — meaning that the acquisition premium was already reflected in Viacom’s share price after months of merger speculation. The deal calls for Viacom shareholders to receive .59625 shares of CBS Corp. for every Viacom share.
CBS and Viacom announced the agreement Tuesday after more than 48 hours of intense final-lap negotiations between the boards of both companies. Scrutiny of the transaction by CBS and Viacom shareholders outside the Redstone orbit will be strong, given the history between the companies.
Viacom CEO Bob Bakish will lead the combined enterprise as president-CEO. Joe Ianniello, president and acting CEO of CBS for the past year, will become chairman-CEO of CBS, leading the Eye-branded assets. Shari Redstone will become chairman of ViacomCBS, moving into a seat that was occupied by her father until early 2016.
“I am really excited to see these two great companies come together so that they can realize the incredible power of their combined assets. My father once said ‘content is king,’ and never has that been more true than today,” Shari Redstone said in a statement. “Through CBS and Viacom’s shared passion for premium content and innovation, we will establish a world-class, multiplatform media organization that is well-positioned for growth in a rapidly transforming industry. Led by a talented leadership team that is excited by the future, ViacomCBS’s success will be underpinned by a commitment to strong values and a culture that empowers our exceptional people at all levels of the organization.”
The deal is expected to close by year’s end. The combined entity is projecting $500 million in synergy savings within two years through the elimination of overlapping corporate operations and other initiatives. The combined company will have about $28 billion in revenue.
ViacomCBS immediately touted its reach and the depth of its content vault. CBS and Viacom together have some 140,000 episodes of TV series and 3,600 film titles. ViacomCBS asserted that its combined platforms account for 22% of all television viewing in the U.S., ahead of Comcast (18%) and Disney (14%).
At present ViacomCBS companies together have 750 TV series ordered to production. Combined, the companies spent $13 billion during the past 12 months on content across CBS’ local and national platforms, Showtime, Viacom’s cable and international channels and Paramount Pictures. Both companies have sought to expand their focus beyond the U.S. in recent years with Viacom’s acquisition of the U.K.’s Channel 5 and Argentina’s Telefe and CBS’ acquisition of Australia’s Network 10.
“Today marks an important day for CBS and Viacom, as 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,” said Bakish. “Our unique ability to produce premium and popular content for global audiences at scale – for our own platforms and for our partners around the world – will enable us to maximize our business for today, while positioning us to lead for years to come. As we look to the future, I couldn’t be more excited about the opportunities ahead for the combined company and all of our stakeholders – including consumers, the creative community, commercial partners, employees and, of course, our shareholders.”
Ianniello’s role was the focus of much wrangling as the merger discussions accelerated during the past week. He is set to oversee CBS-branded assets with a level of autonomy but he will report to Bakish. Showtime and CBS’ Simon & Schuster publishing arm will no longer be part of Ianniello’s portfolio. Showtime chief David Nevins and Simon & Schuster chief Carolyn Reidy will report directly to Bakish.
“This merger brings an exciting new set of opportunities to both companies. At CBS, we have outstanding momentum right now – creatively and operationally – and Viacom’s portfolio will help accelerate that progress,” Ianniello said. “I look forward to all we will do together as we build on our ongoing success. And personally, I am pleased to remain focused on CBS’s top priority – continuing our transformation into a global, multiplatform, premium content company.”
The boards sought to blend senior executives from both companies in the top corporate roles. CBS’ Christina Spade will serve as exec VP and chief financial officer of ViacomCBS. Viacom’s Christa D’Alimonte will be exec VP, general counsel and secretary. Wade Davis, Viacom’s current CFO, will exit after the transaction is closed given the lack of a senior operating role for the executive who has essentially functioned as a chief operating officer for Bakish during the past three years.
The combined company’s 13-member board will consist of six CBS appointees, four from Viacom plus Bakish, Redstone and another board member designated by National Amusements. When the deal is sealed, current CBS shareholders will own about 61% of the enlarged company.
The road to the reunion for CBS and Viacom has been rocky during the past few years. CBS’ previous management regime led by former chairman-CEO Leslie Moonves had balked at the prospect of a reunion — so much so that the CBS board filed a lawsuit against Redstone in May 2018. (See timeline below)
But Moonves’ ouster from CBS last September, amid sexual misconduct allegations, and changes to the CBS board at that time greatly increased the likelihood of a re-merger. CBS and Viacom were formally united in 2000 but split up again in 2006 because of Sumner Redstone’s frustration with Viacom’s sagging stock price.
CBS and Viacom shares have been trending up since late June on anticipation of another merger effort. There’s been chatter on Wall Street that the melding of CBS and Viacom is the first step in a larger effort to expand the company through more acquisitions. Discovery Inc. and Lionsgate have been mentioned as possible targets. CBS has already been in discussions with Lionsgate to acquire the Starz premium cable group.
The push by Shari Redstone to bulk up CBS and Viacom comes as both companies have been dwarfed in size and scope by the tech giants who have barrelled into media in the past few years. Disney, Comcast, AT&T (through its acquisition of Time Warner) have also grown dramatically during the past two decades. It’s understood that Shari Redstone is also open to the possibility of selling the combined company down the road.
Longtime Viacom executive Bakish was named CEO of Viacom in December 2016 as the company was reeling from corporate drama involving the Redstones and former Viacom CEO Philippe Dauman. Ianniello has been acting CEO of CBS since Moonves’ exit in September. Both Bakish and Ianniello have been with their respective companies since 1997, before the original merger was set in 1999.
The new deal will bring together Viacom’s suite of TV brands — including MTV, Nickelodeon, Comedy Central, BET and VH1 — and Paramount Pictures with the CBS broadcast network, CBS Television Studios, CBS Interactive (home of CBS All Access), Showtime, Pop, CBS’ 50% interest in the CW, CBS’ 28 local television stations and publisher Simon & Schuster.
CBS in recent years has slimmed down its holdings to focus squarely on content production and distribution. The company has reaped the rewards of the changing content marketplace, mining new riches from the global hunger for original series and vintage library content. In the 2006 divorce, CBS took possession of Paramount’s television archive, which proved incredibly lucrative as Netflix and others came on the scene with a big checkbook and insatiable demand for programming.
Viacom, on the other hand, struggled under the leadership of Dauman. The company was faulted for failing to invest in content and R&D and for slow reaction to the massive shifts in how viewers watch television. CBS was a pioneer in subscription streaming arena with the launch of the CBS All Access in 2014. Viacom launched copyright infringement litigation battle against YouTube in 2007 that was settled seven years later.
Here is a timeline of key events for CBS and Viacom over the past 20 years:
1999:
SEPTEMBER: Sumner Redstone’s National Amusements Inc. sets $40 billion deal to acquire CBS and merge it with Viacom
2000:
MAY: Viacom completes CBS acquisition, including the purchase of King World Productions
2005:
JUNE: National Amusements announces plan to split CBS and Viacom into separate companies again
2006:
JANUARY:
** CBS splits from Viacom under the leadership of CEO Leslie Moonves. Tom Freston named CEO of Viacom.
** CBS folds UPN into joint venture with Warner Bros.’ WB Network to create CW Network
SEPTEMBER: Longtime Sumner Redstone attorney Philippe Dauman replaces Freston as CEO of Viacom
2007:
MARCH: Viacom files $1 billion copyright infringement lawsuit against YouTube and Google
2008:
MAY: CBS buys CNET Networks for $1.8 billion
2013:
MARCH: CBS buys 50% of TV Guide Network, co-owned with Lionsgate
2014:
MARCH: Viacom, Google settle lawsuit
JUNE: CBS completes spinoff of its outdoor advertising division, honing its focus on content production and distribution
SEPTEMBER: Viacom buys U.K. broadcaster Channel 5
OCTOBER: CBS launches CBS All Access subscription streaming service
2016:
FEBRUARY: Sumner Redstone resigns as chairman of CBS and Viacom amid shareholder pressure and questions about his mental competency. He is named chairman emeritus of both companies.
MAY:
** Sumner Redstone removes Philippe Dauman and George Abrams as trustees of the trust that will inherit his National Amusements holdings after his death.
** Dauman, Abrams file suit to block the move, accusing Shari Redstone of usurping her aging father’s power
JUNE: National Amusements moves to replace five members of Viacom’s board of directors.
AUGUST: Dauman is forced out at Viacom, five new Viacom board members are elected
SEPTEMBER: CBS nudged to the altar with Viacom by National Amusements
NOVEMBER:
** Shari Redstone says she believes that scale matters in media and says she “wasn’t a great proponent” of the 2006 separation of CBS and Viacom.
** Viacom acquires Argentine broadcaster Telefe for $345 million
DECEMBER:
** National Amusements withdraws its support for CBS-Viacom merger talks.
** Bob Bakish named permanent CEO of Viacom
2017:
MAY: Moonves extends his contract as CBS chairman-CEO through mid-2021
2018:
FEBRUARY: The boards of CBS and Viacom establish special committees to explore a merger
MARCH: CBS completes spinoff of radio division
MAY: CBS board of directors sues National Amusements, Shari Redstone for breach of fiduciary duty
JULY:
** First reports of sexual misconduct allegations against Moonves surface in New Yorker expose
** Viacom acquires AwesomenessTV
SEPTEMBER:
** Moonves is forced out of CBS.
** The CBS board and National Amusements settle their litigation.
** Six new CBS board members are elected.
** CBS chief operating officer Joe Ianniello named acting CEO.
OCTOBER:
** Showtime Networks CEO David Nevins named chief content officer for CBS Corp.
** Showtime’s Christina Spade named chief financial officer of CBS Corp.
2019:
JANUARY: Viacom acquires ad-supported streaming platform Pluto TV for $340 million
MARCH: CBS buys out Lionsgate’s 50% stake in Pop (formerly TV Guide Network)
APRIL: Ianniello’s contract as CBS acting CEO is extended through Dec. 31
AUGUST: CBS and Viacom unveil merger agreement after a weekend of marathon negotiations.
###
From Variety:
CBS-Viacom Merger: Read the Internal Memos From Top Execs Bob Bakish and Joe Ianniello
It’s official: CBS and Viacom are merging, in what has been newly christened ViacomCBS Inc. Read the internal memos being circulated by the top execs at both companies.
Here is the full memo from president and acting CEO of CBS Joe Ianniello, who will after the transaction become chairman-CEO of CBS:
Dear Colleagues –
CBS is entering a new era today, announcing a merger with Viacom that bolsters our premium content portfolio and positions us for an even better future. As we all know, there is a race to create more of the best content. We are already leaders in this regard, and today’s news will accelerate our global ambitions.
We are merging at a time when the possibilities for premium content companies are greater than ever. Viacom owns terrific brands – Paramount, Nickelodeon, BET, MTV, Comedy Central and many others – that will complement ours and offer innovative ways to reach a whole new set of viewers. You can read more about the benefits of the deal in this press release.
When we finalize the merger, Viacom CEO Bob Bakish will become the President and CEO of the combined company, and I will become the Chairman and CEO of CBS. Bob and I will ensure a smooth and steady integration of our two great companies.
I am proud that I will continue to lead CBS, responsible for overseeing all of our CBS-branded businesses. I love CBS like you do, and I’m pleased to remain a steward of it along with our great team.
The new ViacomCBS will include corporate representation from both management teams, including our Chief Financial Officer, Chris Spade, who will become ViacomCBS’ CFO.
Together, we will build upon our success in Entertainment, News and Sports with the #1 television network, a prolific studio that produces more and more hit programming for outlets across the industry, an interactive division that operates CBS All Access and is a top-10 digital property in the U.S., a syndication arm that has eight of the top 10 first-run shows on television, and a local media business that has 28 television stations in the country’s major markets. As for our esteemed colleagues at Simon & Schuster and Showtime, your divisions will report to Bob when the deal closes, working under the inspired leadership of Carolyn Reidy and David Nevins – who will also continue to work with me overseeing entertainment programming for CBS, CBS TV Studios and CBS All Access.
CBS was founded on the principle of great content. This is something that will not change. In fact, our announcement today is structured in part to make certain that our tradition of excellence will remain an integral part of our future. And so in my role I’ll be “keeping my Eye on the Eye”…working with you to ensure that the rich heritage of CBS remains central to everything we do…and that CBS continues to thrive as it has magnificently for more than 90 years.
Of course, our best and strongest asset is our people, and we will continue to prioritize investing in you. We’ve accomplished so much on that front recently, and I assure you that our ongoing commitment to a positive, diverse and inclusive workplace will remain a key priority.
It’s important to note that the vast majority of you will continue to excel in your current roles. And while all of us will experience some change, including new challenges and opportunities, I want you to know that each and every one of you is a crucial component of our success, and we value your contributions every day.
It’s also important to remember that the process of combining our two companies won’t happen overnight, and the closing of this merger is likely several months away. I know that many of you will have questions, and they will be addressed in the upcoming weeks and months.
In the meantime, you should all have confidence that today’s announcement will put us in a decidedly better competitive position to succeed in the years ahead. As always, you have my appreciation and respect for the creativity, dedication and loyalty that you bring to your job every day. You are CBS.
Joe
And here is the full internal memo from Viacom CEO Bob Bakish, who will head the combined ViacomCBS Inc as president and CEO:
Team –
I’m writing today to share some big news. We just announced an agreement to merge with CBS, bringing together our two great companies to create a leading global, multiplatform, premium content powerhouse.
This merger comes with a lot of expectation, but it also comes with what I believe is a rare and exciting opportunity. Together, we have the opportunity to be one of the few companies positioned to shape the future of the entertainment industry.
With this agreement, we bring together the most storied studio in Hollywood, a portfolio of brands that have shaped culture for nearly four decades, a broadcast powerhouse rightfully called “The Tiffany Network,” a major force in consumer publishing with Simon & Schuster, and Showtime, a premium brand that consistently pushes the boundaries of storytelling. Between us, we also boast one of the most innovative, diversified collections of digital assets in the industry. Make no mistake, together we aren’t just bigger – we are much, much better.
Our combined company – which will be called ViacomCBS – will have a library of content with incredible breadth and depth, and a reinforced capability to produce premium and popular content at scale. We’ll have greater reach, strengthening our position with advertising and distribution partners. We will have an extended portfolio of direct-to-consumer products — both ad-supported and subscription-based — that will accelerate our growth. And we’ll be able to build on our leadership positions in the US, UK, Australia, Argentina and India for continued global expansion.
Very importantly to me, CBS and Viacom are also a great fit. The CBS team is incredibly talented, with distinct expertise that has propelled the company’s continued leadership in broadcast, D2C and beyond. And, both of our companies share a passion for creating premium content and a commitment to innovating through a rapidly shifting media landscape.
I’m honored to say that I will be leading the combined company as President and CEO. Christa D’Alimonte will serve as EVP, General Counsel and Secretary. Christina Spade, who is currently EVP and CFO of CBS, will serve as EVP and CFO of the combined company. Joe Ianniello – currently President and Acting CEO of CBS – will serve as Chairman and CEO of CBS, overseeing the CBS-branded assets.
Combining our companies will be a joint effort. Over time, we expect there will be opportunities to bring our teams together with our peers at CBS, so we can begin identifying ways to work together and learn from each other.
In short, I’m very excited to begin working with CBS. Together, we can better maximize our business today, while ensuring we lead the industry tomorrow.
This is a big step forward for all of us, and I’m so grateful for all you’ve done to get us here. Despite changes in our company and the industry — as well as the continued speculation of a potential merger — you’ve focused. You’ve executed. And, you’ve delivered, which makes us a much stronger company than we were just a few years ago. I’m hoping you can maintain similar focus and determination in the months ahead as we work to close the transaction.
One change we already know will happen is that Wade Davis will depart in connection with the closing of the transaction, as we’ve determined there isn’t a senior operating role at the corporate level of the merged company that would be consistent with the full breadth of his experience, expertise and the scope of his current role at Viacom.
Wade has been one of Viacom’s most vocal and passionate champions, playing a critical role for the company in helping to develop and successfully execute our strategy to evolve Viacom for the future. In addition to managing our global financial functions, corporate development, investor relations, data science and technology services, over the past two years he has spearheaded important strategic growth initiatives, including most recently the creation of Advanced Marketing Solutions, which was the engine that retuned us to Domestic Ad Sales growth, as well as the acquisition, integration and management of Pluto TV, which helped us establish a leadership position in the DTC marketplace. We’re so grateful for his many contributions, and that he’ll be with us through the closing of the deal.
Throughout the process ahead, I promise to be as accessible and transparent as I can, starting with a Bob Live tomorrow, where I’ll give you an overview of the merger and answer any questions you may have.
I can’t wait to speak with you then. In the meantime, please check out the press release below for further details, and thank you again for all your hard work in getting us to this very important milestone.
Best,
Bob
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From Variety:
CBS-Viacom: 20 Years Later, a Look Back at the High Hopes and Eventual Collapse of That First Merger
It’s been nearly 20 years since Viacom and CBS first announced their intent to merge, in a $35 billion deal that was billed at the time as the biggest ever in showbiz. When Viacom’s Sumner Redstone and then-CBS president and CEO Mel Karmazin revealed the plan at a Sept. 7, 1999, press conference, the combined Viacom/CBS empire was valued at $80 billion.
That original merger would ultimately only last five years, as Redstone moved to split Viacom and CBS back into separate companies in 2005 — keeping his oversight over both, of course. But in the early days of the merger, the outlook was rosy. Redstone called Viacom and CBS “natural partners.”
Redstone is now incapacitated, his empire in the hands of his daughter, Shari Redstone, who is guiding CBS and Viacom back together. But even at the time of the original merger, the question of the elder Redstone’s advanced age — he was 76 — was a topic of concern, which is why a succession plan was discussed. As part of the original plan, Redstone kept the chairman/CEO title over all of Viacom, with Karmazin in line as president and COO, and as Redstone’s eventual replacement. Of course, Karmazin was eventually pushed out by Redstone. But at the time, Redstone said, “I insisted (Mel) come with the deal. The guy is brilliant. We’re kindred spirits.”
Ironically, Viacom’s DNA has always come from CBS. The original Viacom was first created in the 1970s after the Justice Department forced CBS to sell off its syndication unit. Originally just a distribution company, Viacom began purchasing TV stations and then cable outlets (including MTV and Nickelodeon in 1984). Then Redstone’s National Amusements took control of the company in 1986, and he began an acquisitions spree that included Paramount Communications in 1994 and Blockbuster Video, which included Spelling Entertainment, in 1995.
The Viacom acquisition came nearly five years after Westinghouse paid $5.4 billion for CBS in 1995. In acquiring CBS, Redstone touted the ability to advertise and cross-promote Paramount and Viacom content across CBS’ TV and radio stations, as well as outdoor billboards. The deal was seen as complimentary: CBS was mostly in broadcast (both TV and radio), while Viacom’s strengths were in film and cable TV.
The CBS/Viacom merger was so big at the time that Senate antitrust subcommittee chairman Mike DeWine (R-Ohio) called the merger “a little scary.”
Among the chief concerns: That CBS/Viacom would own two broadcast networks, as Viacom was simultaneously buying out its 50/50 partnership with Chris-Craft to become sole owner of weblet UPN. Viacom threatened to shut down UPN if it couldn’t keep the small network in the merger, and regulators ultimately allowed the company to keep it along with CBS.
Because it oversees broadcast licenses, the FCC was the final step in blessing Viacom/CBS, which it did on May 3, 2000. The first real test of the power of the combined company came soon after, when “Survivor” premiered to stunning ratings — and Redstone credited the merged company’s increased footprint for helping promote the show. Speaking soon after the merger was made official, Redstone proclaimed that the combo of “our incredibly complementary operations” would make “Viacom the preeminent success story of the media industry for many decades to come.”
Early examples of cross-company synergy that year included TV Land airing a week-long marathon of classic episodes of “The Fugitive” to promote CBS’ revival of the franchise. VH1 was tapped to promote the Eye’s new Bette Midler sitcom with a week of Midler-themed programming. CBS also announced an MTV-produced Super Bowl halftime show, a Nick Jr.-branded Saturday kids’ block, and TV movie co-productions with Showtime.
“Within our company, through all sorts of different tentacles, we are all working together in a splendid way,” then-CBS head Leslie Moonves said at the summer 2000 TV Critics Association press tour.
But it didn’t turn out that way. Bumps in the synergistic road included that 2004 Super Bowl XXXVIII halftime show, produced for CBS by MTV. That event created an uproar after Justin Timberlake tore off part of Janet Jackson’s clothes on camera, visibly showing her nipple for a brief second. The resulting uproar included a record $550,000 fine for CBS by the FCC (although an appeals court eventually voided the fee) and beyond that led to a crackdown in on-air content, spurred by spike in content complaints and FCC fines across the board.
In the corporate boardroom, the Viacom/CBS merger also led to more executive intrigue, as Moonves continued to amass more power and Redstone rather quickly soured on Karmazin.
Karmazin, a super salesman, had helped build up the Infinity Broadcasting radio chain and, subsequently, CBS Corp. But after CBS merged with Viacom, this feisty entrepreneur had a hard time working with Redstone. After four years of bickering over how best to manage the combined operations of Viacom and CBS, Karmazin ceded ground to Redstone. The two fought over Karmazin’s tight-fisted Wall Street-oriented style, and whether or not the company was making enough big bets on future technology or blockbuster movies. As Karmazin departed, Redstone gave more power to Moonves and Viacom’s Tom Freston.
By 2005, Redstone had become frustrated by the colossus he had created. Viacom’s stock performance was not to his liking and he saw few if any transformative acquisition properties on the horizon. So he proposed breaking Viacom into two companies, housing movie and cable-TV operations in a company led by Freston and broadcast TV, radio and outdoor advertising operations under Moonves. Freston’s Viacom was supposed to grow more quickly without being encumbered by the more stable businesses given to Moonves. Redstone, in essence, would oversee a growth stock and a value stock. “Sometimes, divorce is better than marriage,” Redstone quipped in an interview at the time.
After the breakup, however, CBS proved to be a steady ship, while Viacom saw its shares stagnate as the company struggled to figure out how to adjust to the digital age — leading to Redstone’s quick ouster of Freston in 2006. (At the time, part of Redstone’s unhappiness came from Viacom failing to acquire MySpace, at the time the hottest social media property online.) His replacement, Phillipe Dauman, managed a more than 130% increase in Viacom shares, to almost $88 a share in early 2014, only to see the price as its cable assets continued to face viewership erosion.
In 2016, Dauman — who had been pursing a plan to sell nearly half of the Paramount studio — lost a power struggle with Shari Redstone and was ousted himself. At CBS, Moonves, of course, was also eventually thrown out, but for very different reasons, when allegations of sexual assault forced his exit in 2018.
Now, with CBS and Viacom about to renew their vows after all that drama and all these years later, some investors may wonder whether the company should have stuck it out under a single umbrella.
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From Variety:
Wall Street Has Mixed Response to Viacom-CBS Merger
As top executives from CBS and Viacom celebrate a new merger and the hard work behind it, Wall Street has questions about the combined company’s operating structure and next steps.
Analysts pressed the company Tuesday for more information about certain elements of the merged owners of the CBS broadcast network; Showtime pay-cable channel; Paramount movie studio and Nickelodeon kids-media empire. They are not convinced the current management structure, which puts CBS CEO Joe Ianniello in charge of CBS-branded assets and makes Viacom CEO Bob Bakish the head of the whole company, will allow for maximizing assets. And they want more information on expected results from using the combined company to boost revenue from streaming-video and new kinds of data-and-technology-enabled advertising.
During a call with investors, Bakish and Ianniello sketched a vision that includes generating new money from direct-to-consumer venues like the ad-supported streaming outlet PlutoTV and the CBS subscription-based CBS All Access product; from distribution outlets that will have to weigh the connection between various Viacom cable outlets and the CBS broadcast network; and from advertisers, who crave the ability to reach broad swathes of consumers while using different programming segments to aim speak to them in bespoke fashion.
“CBS and Viacom are two companies that share not just a common heritage, but a common culture built around content that drives strong connections with consumers and partners alike,” Bakish said during the call.
Wall Street is eager for more information, and is skeptical about certain elements of the new company – particularly how it will operate with an unorthodox executive structure. The new ViacomCBS looks much like the old one, where Sumner Redstone served as chairman of a company that essentially had two parts: Tom Freston ran cable operations while Leslie Moonves supervised CBS assets. The new version of the company will install Redstone’s daughter Shari as chairman, but leaves some questions about whether the combination will be able to maximize its efforts with the assignments given to Bakish and Ianniello.
“While we understand the need for a compromise, this is less than ideal, in our view, and is likely to become a hurdle for truly integrating strategy across these assets. Instead, a structure that would have fostered potentially a better operating environment would have been if Mr. Ianniello were appointed as the COO of the combined company,” said Kannan Venkateshwar, an analyst with Barclays, in a Tuesday research note. “The management structure is also likely to create unnecessary day-to-day operating friction as the CBS and Viacom silos and reporting structures are likely to skew incentives towards maintaining status quo. Therefore, we believe performance of the merged company could result in more operational volatility post-deal.”
Analysts also questioned how quickly a merged Viacom and CBS could scale new revenue. The new company “is going to go to market jointly,” said Ianniello, predicting new outreach would spark attention at next year’s “upfront” market, when U.S. TV companies grapple with Madison Avenue over the sale of advertising inventory for the next programming cycle.
As several of the companies’ rivals prepare to launch massive new streaming-video outlets like Disney Plus, HBO Max and an NBCUniversal product, one analyst fretted over the ability of CBS and Viacom to do so in a meaningful way. Todd Juenger, a media analyst for Bernstein, suggested that investment in a new direct-to-consumer outlet might not bear fruit. “More likely, we believe the pro forma company will invest the synergies in pursuit of some version of a DTC product – which we don’t believe would have meaningful consumer appeal,” he said in a Tuesday research note. “This investment (new original content, foregone licensing, cannibalization) would wipe out the synergies (and then some), with even a bigger impact on free cash flow.. But we doubt the return on investment.”
Despite some of the skeptical sentiment, shares of both companies rose in Tuesday trading. Shares of Viacom were up 68 cents, or 2.38%, to $29.21 a share. Shares of CBS, meanwhile, rose 64 cents a share, or 1.33%, to $48.70 per share.
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From The Hollywood Reporter:
Top CBS Investor Hints at Lawsuit Over Viacom Merger
No therapists needed for Viacom-CBS. But how about regulators and minority stakeholders?
The worst-kept secret in the media business is official: Viacom and CBS Corp. are merging again, with Shari Redstone becoming chair of the combined entity. But will shareholder litigation get in the way?
Upon the announcement, Mario Gabelli, the biggest independent holder of voting stock in the two companies, wasn't happy. He tweeted, "Breach of Fiduciary duties.........lawyers at work."
The history of CBS/Viacom is, in many ways, a tale of corporate and media law.
Viacom exists, in the first place, because the FCC came out with rules in 1970 that forbid television networks from holding interest in companies that produced or syndicated content. Those fin-syn rules caused CBS to spin off Viacom, even if Sumner Redstone eventually regained control in a proxy fight. The relaxation of fin-syn rules in the 1980s, and subsequent repeal in the early 1990s, eventually resulted in a Viacom/CBS reunion in 1999. The "Humpty-Dumpty" merger, as The New York Times put it at the time, had some complications as Viacom had amassed its own local station holdings (remember UPN?) and thus the '99 merger had to negotiate the FCC's then-35 percent cap on national television ownership.
Redstone managed his way past that tangle, even if he did have to appear before Congress to testify about media competition and consolidation. But the reunion would only last a few years. In 2006, the companies decided to split again.
It wasn't therapists intervening to cause the divorcees to re-explore their love for one another. Instead, Shari Redstone's ascendency and an unquenchable need for "scale" in the digital era has caused yet another reunion in this on-again, off-again, on-again relationship.
This time, thanks to the rise of digital giants like Netflix and Amazon and the perception that Viacom and CBS are stewards of a struggling legacy operation in the entertainment business, analysts don't expect regulators to put up a fight this time.
Instead, if there are any hiccups at all, it could be from shareholders.
The Redstones control CBS and Viacom through National Amusements, Inc., and it's a dual-class voting structure that has largely allowed the family ultimate power, even if public stockholders hold 90 percent of CBS’s equity. Nevertheless, Redstone has fiduciary duties to all shareholders of CBS and Viacom.
For months, Gabelli has been cold and hot about a deal.
Last year, he told CNBC that the companies should remain separate for now with the opinion that CBS was a "loaded laggard" and Viacom a "doubly loaded laggard." But just two weeks ago, he apparently changed his mind by expressing to that same network that the merger has “got to” happen and “should come together for scale.”
But maybe the details count.
On Twitter, Gabelli raises the issue of "appraisal rights for voting shares," which basically is code for how a corporation's minority shareholder has the right for an independent valuation of stock price for repurchased shares.
If he files suit, it's likely coming in Delaware Chancery Court and may include some of the backstory behind the merger including the Redstones' successful battle against Leslie Moonves over control of CBS.
In the meantime, CBS and Viacom tout synergies, with analysts weighing in about why this time it's different. All the king's horses and all the king's men gathered to put Humpty back together again.
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From THR:
How ViacomCBS' Film, TV Divisions May Aim to Compete
'Mission: Impossible,' 'Transformers' and 'Star Trek' franchises would be under the same roof in the merged company.
With CBS Corp. and Viacom finally set to merge, the new ViacomCBS will bring together the Paramount Pictures film studio and both firms' TV production businesses into a new studio powerhouse.
The combined 2019 revenue of the two companies' studio businesses, namely Paramount and the CBS TV studio, would amount to more than $6.8 billion, with nearly $4.5 billion of that coming from TV production ($3.6 billion from CBS and $856 million from Viacom), and earnings before interest, taxes, depreciation and amortization of $920 million, Credit Suisse analyst Douglas Mitchelson recently estimated.
On a call Tuesday with reporters, ViacomCBS CEO designate Bob Bakish highlighted the merged firm's expanded capability to produce content at scale to add to its library comprising 140,000-plus TV episodes and 3,600-plus film titles, including such "iconic intellectual property" as Star Trek and Mission: Impossible. "It's true content scale," said the exec.
Bakish also vowed that ViacomCBS could "feed escalating demand for third-party content" from the likes of Comcast, Charter, Fox, CBS, Netflix, Disney+ and Facebook Watch. After all, the merger partners said they would bring together "production capabilities across five continents, including more than 750 series ordered to or in production."
While the deal is set to close only by the end of the year, it seems clear that Paramount chairman and CEO Jim Gianopulos, who just renewed his contract on Monday, will oversee the combined film studio operations. Boasting franchises as Mission: Impossible, Transformers and Star Trek, Paramount has been in turnaround mode under Gianopulos' leadership.
For its latest full fiscal year, ended in September, Paramount's film unit reported an adjusted operating loss of $39 million after an operating loss of $280 million in the previous year, and a loss of $445 million in the year before that. Management has forecast a return to profitability for the current fiscal year, with The Hollywood Reporter's calculations showing that Paramount actually turned the slightest of profits, $1 million, during calendar year 2018 on a 1 percent revenue gain to $3.1 billion.
Paramount's growing TV production arm, which the company forecast would double its output this year, has helped boost profits and has had success with the Amazon hit series Jack Ryan and Netflix’s Maniac and The Haunting of Hill House, as well as The Alienist for TBS. Fitch analyst Patrice Cucinello says Paramount Television's increased output and the resulting higher licensing revenue have started providing "a growing and more stable revenue stream" for Viacom's filmed entertainment segment worth $400 million in revenue in fiscal year 2018 and expected to grow 50 percent this fiscal year. Other growth drivers have been Paramount’s bigger slate and the growing Paramount Players label that is bringing Viacom TV properties and contemporary fare to the screen.
Meanwhile, CBS Corp. has traditionally disclosed little about the financial performance of CBS Films, whose releases have included Inside Llewyn Davis, Pride, Patriots Day and Hell or High Water. But early this year, it said that CBS Films was being folded into the CBS Entertainment Group, shifting its focus towards creating content for the company's streaming platforms, such as CBS All Access (with theatrical releases, through the company’s partnership with Lionsgate, of four previously announced titles, namely Five Feet Apart, Scary Stories to Tell in the Dark, Pavarotti and Lexi).
Importantly, CBS brings its top-notch TV production business CBS Television Studios, led by president David Stapf, to the table. It is part of CBS Corp.'s entertainment unit, which also includes the financials for the CBS network and more. "Notably, both CBS and Viacom have become providers of content to streaming players," Fitch's Cucinello highlighted in a recent report. "The new [merged company] could continue to provide content to third parties, benefiting from the potential scarcity effect as larger media companies pull their content off third-party platforms." However, Fitch believes that the pro forma company could also utilize its content production capabilities to offer a more comprehensive direct-to-consumer product offering.
Wall Street analysts see a series of other synergies in the combined studio operations. For example, the Paramount studio "could benefit from an influx of CBS' intellectual property," such as Star Trek, S&P Global analyst Naveen Sarma said in a recent report.
And "Showtime would be able to lock up Paramount’s pay 1 film rights," said Michael Nathanson, analyst at MoffettNathanson, who called Paramount’s film library "valuable." Indeed, Bakish said on the company's most recent earnings conference call that Paramount's pay TV window licensing deal with premium TV provider Epix expires in a few years and the company expects to capture the financial upside due to its "incredible value."
Importantly, the combined TV production business looks to be a key growth driver for the combined company. "CBS arguably has the strongest TV production/syndication pipeline in the industry," CFRA Research analyst Tuna Amobi tells THR. And Paramount has been expanding its production activity.
Mitchelson estimates the combined CBS-Viacom TV studio operations would bring in 2019 revenue of $4.47 billion, with EBITDA of $960 million."The addition of CBS' TV production business would enhance Paramount's own efforts and would reduce its earnings volatility," said Sarma. And Nathanson argued in a recent report, "CBS' and Paramount's production asset will quickly move up the ranks to challenge the big boys of Disney, Comcast, AT&T and Netflix and will be an attractive home for creative talent. The improved scale will create a stronger negotiating position vis-a-vis third parties and cost synergies in shared services."
On the company’s recent earnings call, Bakish highlighted the growth in Paramount's TV studio. "Paramount TV now has 26 shows ordered or in production, including the sequel series to TNT's The Alienist, the adaptation of the international best-seller Shantaram for Apple and two series for WarnerMedia's upcoming streaming service, among others. And production continues to ramp up at our other studios, too."
The focus was similar on CBS' earnings call. "CBS is now producing 89 shows, up from 70 shows just a year ago," CBS acting CEO Joe Ianniello said at the time. "That's a 27 percent increase. As we create more and more content, we are monetizing its value using a two-pronged approach. The first approach is to produce more shows for our own platforms."
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From THR:
ViacomCBS Chief Says Combined Company Will Hunt for Acquisitions
Bob Bakish tells analysts that the combined company's balance sheet will leave it "very well positioned to exploit" possible deals.
After CBS and Viacom merge, the combined company will look to get even bigger through strategic acquisitions, executives said Tuesday on a call with analysts.
"As a leading global multiplatform premium content company, we will also explore strategic transactions that enhance our content portfolio, accelerate our direct-to-consumer growth and strengthen our international footprint," Christina Spade, who will be CFO of ViacomCBS, told analysts on the call. "We are not really missing any assets at this point."
Added Spade, "Having said that, both Viacom and CBS independently, we explore everything, and there is a lot happening in the marketplace. It is moving at a dynamic rate."
Viacom CEO Bob Bakish, who will be president and CEO of the combined company, said on the call that the company's cash flow generation and balance sheet will leave it well positioned to make deals if necessary. He also echoed Spade's comments, saying that the company does not have "any big gaps per se."
"As indicated, both of us continue to look at opportunities in the marketplace, and have executed on some of those in the past," Bakish said. "One of the other things this deal does is take a big uncertainty off the company, which was an overhang — we will be very well positioned to exploit those opportunities."
The combined company will include the CBS broadcast network, the Viacom suite of cable channels, Showtime, Paramount Pictures and Simon & Schuster, among other assets.
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From THR:
CBS, Viacom Strike Deal to Recombine
Shari Redstone, controlling shareholder of both companies via National Amusements, becomes chair of the combined entity with a forecast $500 million in post-merger cost savings.
Thirteen years after Sumner Redstone split his entertainment empire in two, Viacom and CBS struck a deal on Tuesday to recombine, the latest in a recent rash of entertainment industry megadeals.
As expected, Viacom CEO Bob Bakish will lead the merged company as president and CEO, while CBS Corp. acting chief Joe Ianniello will become chairman and CEO of CBS where he will oversee all CBS-branded assets. CBS CFO Christina Spade will serve as CFO of the merged firm, and Shari Redstone, vice chair of both companies, will serve as chair of the combined entity, dubbed ViacomCBS Inc.
The merged company will have a library of 3,600 film titles and 140,000 TV episodes, an important set of assets as CBS All Access and Showtime OTT battle with Netflix and others and as Viacom's PlutoTV gears up to do the same. ViacomCBS will also boast a 22 percent share of the U.S. television audience, larger than Comcast, Disney, Fox Corporation, Discovery or WarnerMedia.
"I am really excited to see these two great companies come together so that they can realize the incredible power of their combined assets. My father once said ‘content is king,’ and never has that been more true than today," said Shari Redstone.
Bakish told investors during an analyst call the re-merger will allow the combined entity of ViacomCBS to scale production of premium content, unite global production and distribution capabilities from the separate companies, accelerate their respective corporate growth strategies and generate "significant synergy value."
The transaction, expected to close at the end of 2019, pending regulatory and shareholder approvals, will result in a combined entity with around 140,000 premium TV episodes and over 3600 movie titles in its library, Bakish told investors. ViacomCBS will also have around 750 TV series that have either been ordered or are in production.
On the production side, Bakish said Viacom and CBS in the last 12 months had jointly spent $13 billion on premium content, making it one of the largest media players as a combined entity.
Bakish added the deal will also bring together "powerful consumer brands" and offer an expanded portfolio of direct to consumer products in the subscription and ad-supported space via "an ecosystem that will provide consumers with new forms of access for premium content, and one that will accelerate our growth."
As they negotiated the re-merger, both companies previously agreed on the management setup and the composition of the board of the merged company, which will bring together assets like Paramount Pictures, Comedy Central and MTV with CBS assets like Showtime and streaming offering All Access. The stock exchange ratio for the deal was the final haggling point that was resolved early in the week. The boards of both companies have approved the all-stock deal that will result in CBS shareholders owning 61 percent of the merged firm while Viacom investors get 39 percent.
The company will have 13 board members, including Shari Redstone as chair, another member designated by National Amusements, the president and CEO of the combined company, namely Bakish, along with six independent members from CBS and four independent members from Viacom.
Privately held National Amusements, owned by the Redstone family, is the controlling shareholder of both firms, which had twice before explored a recombination without reaching an agreement.
Consolidation to gain more scale amid competition from streaming video and technology giants has been a key focus for the entertainment sector in recent years. The CBS-Viacom deal agreement comes after Walt Disney's $71.3 billion acquisition of large parts of 21st Century Fox and AT&T's $85 billion takeover of Time Warner. CBS is also understood to have offered Lionsgate $5 billion to buy its premium TV unit Starz.
Reports of the likely share ratio, along with a broader stock market decline, sent shares of Viacom down 4.9 percent to $28.53 on Monday, while CBS' stock fell 1.8 percent to $48.04.
In 2018, CNBC reported that the companies had agreed on a price ratio of 0.6135 CBS shares for every Viacom Class B share before a deal fell apart. But the ratio has likely changed this time around given where the stocks have been trading. MoffettNathanson’s Michael Nathanson wrote in mid-July that "we are comfortable using the current ratio of 0.59 times as the base case in our merger model." And Loop Capital analyst Alan Gould more recently wrote: "Viacom’s shares have traded at an average ratio of 0.598 times the CBS price for the past 60 days, which compares with 0.590 over the past six months and 0.577 over the past year."
The two entertainment companies have operated as separate companies since their split in 2006. But Shari Redstone has touted the benefits of scale and is understood to have said at a recent event that if CBS and Viacom combine, the merged firm could look for further deals down the line.
NA has in the past said that a combination "might offer substantial synergies that would allow the combined company to respond even more aggressively and effectively to the challenges of the changing entertainment and media landscape." But in a settlement with CBS last year, it agreed not to push for a Viacom-CBS deal for a couple of years, leaving any such initiative to the companies themselves.
CBS has focused on fewer networks, mostly the CBS broadcast network and premium brand Showtime, along with offering direct-to-consumer services, such as CBS All Access. Viacom under Bakish has renewed various carriage deals with pay TV giants and looked to build new revenue streams. Earlier this year, it also acquired Pluto TV to build up a streaming business.
Bakish during the analyst call touted the re-merger for accelerating the DTC growth strategy for both CBS and Viacom. "We see significant cross-platform upside as the DTC portfolio benefits from the combined company's content and marketing," he said.
CBS CEO Ianniello on the analyst call said the combined entity would look to drive higher affiliate fees as he insisted CBS and Viacom have a combined 22 percent of domestic TV viewership, and yet only secure 11 percent of retransmission fees. "This means the combined company will have tremendous upside we should be going after," Ianniello argued.
To secure higher retransmission fees, Ianniello argued both companies would join forces during upcoming affiliate renewal talks. And on the advertising side, he looked ahead to the 2020 Upfronts before the benefits of a combined entity for CBS and Viacom were significantly realized with increased TV ad sales.
"It's hard to quantify, but when you look at the scale and the size, that's why I talk about billions, and there will be huge opportunities as the driving force behind this deal," the CBS boss added of the synergies to come from the transaction.
Bakish also responded to a question about ViacomCBS continuing to possibly pursue additional merger and acquisition activity amid industry consolidation. "We will continue to look at opportunities in the marketplace," he said, without addressing whether ViacomCBS still eyes a possible takeover of Starz from Lionsgate, as has been speculated recently.
"We have executed on some of those (deals) in the past and this is something we will continue to do," he argued. At the same time, Bakish didn't point to imminent deals as he added, “I don’t think there are any gaps per se."
Aug. 13, 3 p.m. PST: Updated with comments from analyst call.
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From THR:
CBS and Viacom Chiefs' Memos to Staff Hint at Changes Ahead
Joseph Ianniello tells employees merger "will accelerate our global ambitions," while Bob Bakish says the combined company will "shape the future of the entertainment industry."
In emails to their respective employees sent after the Viacom-CBS merger announcement, CBS CEO Joe Ianniello and Viacom CEO Bob Bakish touted the potential of the combined companies, while acknowledging that the move will result in staff changes.
Bob Bakish will be president and CEO of the combined company, to be called ViacomCBS, while Ianniello will be chairman and CEO of CBS after the merger is completed, reporting to Bakish. Viacom's brands include MTV Networks and Paramount Pictures, while CBS also owns CBS TV Studios and Showtime.
"As we all know, there is a race to create more of the best content. We are already leaders in this regard, and today’s news will accelerate our global ambitions," Ianniello wrote in his memo to CBS staff.
"This merger comes with a lot of expectation, but it also comes with what I believe is a rare and exciting opportunity," Bakish wrote in his memo to Viacom employees. "Together, we have the opportunity to be one of the few companies positioned to shape the future of the entertainment industry."
The two CEOs also acknowledged that the combined entity will result in staff changes. The companies say they expect to have annual run-rate synergies of $500 million, with some of that coming from layoffs.
"[T]he vast majority of you will continue to excel in your current roles. And while all of us will experience some change, including new challenges and opportunities, I want you to know that each and every one of you is a crucial component of our success, and we value your contributions every day," Ianniello wrote in his email. "It’s also important to remember that the process of combining our two companies won’t happen overnight, and the closing of this merger is likely several months away. I know that many of you will have questions, and they will be addressed in the upcoming weeks and months."
Bakish, meanwhile, noted in his memo that Viacom CFO Wade Davis will be leaving the company, as CBS CFO Christina Spade will become CFO of ViacomCBS.
"Combining our companies will be a joint effort," Bakish added. "Over time, we expect there will be opportunities to bring our teams together with our peers at CBS, so we can begin identifying ways to work together and learn from each other."
You can read the full memos from Ianniello and Bakish below.
Memo from CBS CEO Joe Ianniello:
Dear Colleagues -
CBS is entering a new era today, announcing a merger with Viacom that bolsters our premium content portfolio and positions us for an even better future. As we all know, there is a race to create more of the best content. We are already leaders in this regard, and today’s news will accelerate our global ambitions.
We are merging at a time when the possibilities for premium content companies are greater than ever. Viacom owns terrific brands – Paramount, Nickelodeon, BET, MTV, Comedy Central and many others – that will complement ours and offer innovative ways to reach a whole new set of viewers. You can read more about the benefits of the deal in this press release.
When we finalize the merger, Viacom CEO Bob Bakish will become the President and CEO of the combined company, and I will become the Chairman and CEO of CBS. Bob and I will ensure a smooth and steady integration of our two great companies.
I am proud that I will continue to lead CBS, responsible for overseeing all of our CBS-branded businesses. I love CBS like you do, and I’m pleased to remain a steward of it along with our great team.
The new ViacomCBS will include corporate representation from both management teams, including our Chief Financial Officer, Chris Spade, who will become ViacomCBS’ CFO.
Together, we will build upon our success in Entertainment, News and Sports with the #1 television network, a prolific studio that produces more and more hit programming for outlets across the industry, an interactive division that operates CBS All Access and is a top-10 digital property in the U.S., a syndication arm that has eight of the top 10 first-run shows on television, and a local media business that has 28 television stations in the country’s major markets. As for our esteemed colleagues at Simon & Schuster and Showtime, your divisions will report to Bob when the deal closes, working under the inspired leadership of Carolyn Reidy and David Nevins – who will also continue to work with me overseeing entertainment programming for CBS, CBS TV Studios and CBS All Access.
CBS was founded on the principle of great content. This is something that will not change. In fact, our announcement today is structured in part to make certain that our tradition of excellence will remain an integral part of our future. And so in my role I’ll be “keeping my Eye on the Eye”…working with you to ensure that the rich heritage of CBS remains central to everything we do…and that CBS continues to thrive as it has magnificently for more than 90 years.
Of course, our best and strongest asset is our people, and we will continue to prioritize investing in you. We’ve accomplished so much on that front recently, and I assure you that our ongoing commitment to a positive, diverse and inclusive workplace will remain a key priority.
It’s important to note that the vast majority of you will continue to excel in your current roles. And while all of us will experience some change, including new challenges and opportunities, I want you to know that each and every one of you is a crucial component of our success, and we value your contributions every day.
It’s also important to remember that the process of combining our two companies won’t happen overnight, and the closing of this merger is likely several months away. I know that many of you will have questions, and they will be addressed in the upcoming weeks and months.
In the meantime, you should all have confidence that today’s announcement will put us in a decidedly better competitive position to succeed in the years ahead. As always, you have my appreciation and respect for the creativity, dedication and loyalty that you bring to your job every day. You are CBS.
Joe
Memo from Viacom CEO Bob Bakish:
Team –
I’m writing today to share some big news. We just announced an agreement to merge with CBS, bringing together our two great companies to create a leading global, multiplatform, premium content powerhouse.
This merger comes with a lot of expectation, but it also comes with what I believe is a rare and exciting opportunity. Together, we have the opportunity to be one of the few companies positioned to shape the future of the entertainment industry.
With this agreement, we bring together the most storied studio in Hollywood, a portfolio of brands that have shaped culture for nearly four decades, a broadcast powerhouse rightfully called “The Tiffany Network,” a major force in consumer publishing with Simon & Schuster, and Showtime, a premium brand that consistently pushes the boundaries of storytelling. Between us, we also boast one of the most innovative, diversified collections of digital assets in the industry. Make no mistake, together we aren’t just bigger – we are much, much better.
Our combined company – which will be called ViacomCBS – will have a library of content with incredible breadth and depth, and a reinforced capability to produce premium and popular content at scale. We’ll have greater reach, strengthening our position with advertising and distribution partners. We will have an extended portfolio of direct-to-consumer products — both ad-supported and subscription-based — that will accelerate our growth. And we’ll be able to build on our leadership positions in the US, UK, Australia, Argentina and India for continued global expansion.
Very importantly to me, CBS and Viacom are also a great fit. The CBS team is incredibly talented, with distinct expertise that has propelled the company’s continued leadership in broadcast, D2C and beyond. And, both of our companies share a passion for creating premium content and a commitment to innovating through a rapidly shifting media landscape.
I’m honored to say that I will be leading the combined company as President and CEO. Christa D’Alimonte will serve as EVP, General Counsel and Secretary. Christina Spade, who is currently EVP and CFO of CBS, will serve as EVP and CFO of the combined company. Joe Ianniello – currently President and Acting CEO of CBS – will serve as Chairman and CEO of CBS, overseeing the CBS-branded assets.
Combining our companies will be a joint effort. Over time, we expect there will be opportunities to bring our teams together with our peers at CBS, so we can begin identifying ways to work together and learn from each other.
In short, I’m very excited to begin working with CBS. Together, we can better maximize our business today, while ensuring we lead the industry tomorrow.
This is a big step forward for all of us, and I’m so grateful for all you’ve done to get us here. Despite changes in our company and the industry — as well as the continued speculation of a potential merger — you’ve focused. You’ve executed. And, you’ve delivered, which makes us a much stronger company than we were just a few years ago. I’m hoping you can maintain similar focus and determination in the months ahead as we work to close the transaction.
One change we already know will happen is that Wade Davis will depart in connection with the closing of the transaction, as we’ve determined there isn’t a senior operating role at the corporate level of the merged company that would be consistent with the full breadth of his experience, expertise and the scope of his current role at Viacom.
Wade has been one of Viacom’s most vocal and passionate champions, playing a critical role for the company in helping to develop and successfully execute our strategy to evolve Viacom for the future. In addition to managing our global financial functions, corporate development, investor relations, data science and technology services, over the past two years he has spearheaded important strategic growth initiatives, including most recently the creation of Advanced Marketing Solutions, which was the engine that retuned us to Domestic Ad Sales growth, as well as the acquisition, integration and management of Pluto TV, which helped us establish a leadership position in the DTC marketplace. We’re so grateful for his many contributions, and that he’ll be with us through the closing of the deal.
Throughout the process ahead, I promise to be as accessible and transparent as I can, starting with a Bob Live tomorrow, where I’ll give you an overview of the merger and answer any questions you may have.
I can’t wait to speak with you then. In the meantime, please check out the press release below for further details, and thank you again for all your hard work in getting us to this very important milestone.
Best,
Bob
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From THR:
Why This CBS-Viacom Merger Will Be Different From 1999
One big difference is that this year's deal will see CBS shareholders own a majority of the combined company, while in 1999, Viacom was the acquiring entity.
In early September 1999, Viacom and CBS unveiled a roughly $35 billion stock combination — at the time the largest U.S. media deal ever — which was completed in 2000. They then agreed to separate in 2005 and the separation became effective in 2006. Fast-forward nearly two decades, and the two entertainment companies are recombining.
"There are lots of differences, but some is the same," Hal Vogel, CEO of Vogel Capital Management and a former Wall Street entertainment analyst, told The Hollywood Reporter about the parallels and differences. "Same is that the market was [at a high] and exuberant after a long bull run into 1999. In 1999, there was the same interest on building scale and same rather messy issues about combining managements."
Below is a closer look at the things that are similar and others that are very different this time around.
Viacom isn't the buyer this time.
One of the biggest differences is that the CBS-Viacom deal of 2019 will see CBS shareholders own a majority of the combined company, while in 1999, Viacom was the acquiring company.
The stock exchange ratio of well less than one CBS share per Viacom share is due to the former's larger market capitalization. "Viacom's performance has clearly been improving, but on a stand-alone basis we believe CBS is the stronger entity," Loop Capital analyst Alan Gould wrote in a recent note in reference to Viacom's perceived bigger challenges in the digital age.
However, Viacom for now gets the lead position in the merged company's name: ViacomCBS.
Consolidation is in focus again, but this time there is also competition from tech giants.
With AT&T having acquired Time Warner, Comcast having bought European pay TV giant Sky, and Walt Disney having taken over large parts of 21st Century Fox, boosting companies' scale through consolidation has been one of the big discussion topics on Wall Street and in Hollywood over the past couple of years.
In 1999, mergers and acquisitions were also a big talking point. The Federal Communications Commission back then changed rules to allow one company to own more than one television station in a single market, leading media companies to explore deals.
Back then, Viacom, the fourth-largest media firm in the U.S. at the time, struck the deal for CBS to become the sector's No. 2 behind Time Warner.
This time around though, the consolidation takes place with the backdrop of technology and streaming giants — from Netflix and Amazon to Apple, Alphabet/Google and Facebook — competing for consumer time, attention and spending. Case in point: cord-cutting, which remains a key talking point for all entertainment industry executives.
As CBS Corp. acting CEO Joe Ianniello, who will oversee the CBS-branded assets after the deal closes, wrote in a staff memo on Tuesday: "There is a race to create more of the best content. We are already leaders in this regard, and today’s news will accelerate our global ambitions."
The Redstone factor — with a twist.
Viacom in 1999 was led by Sumner Redstone, now 96, who had a reputation for enjoying the deal hunt. This time around, his daughter, Shari Redstone, vice chair of Viacom and CBS Corp., will be a key player in ensuring the companies' marriage goes well.
Shari Redstone has said in the past that scale has benefits in the digital age when entertainment companies compete with streaming giants, such as Netflix, and technology powerhouses, such as Apple, Facebook and Amazon. "A combination of CBS and Viacom might offer substantial synergies that would allow the combined company to respond even more aggressively and effectively to the challenges of the changing entertainment and media landscape," National Amusements said in 2016 when it called for the firms to explore a recombination, which failed, just like a similar request again failed in 2018.
This time around, National Amusements had promised not to push for another set of talks for a while, but the companies initiated talks themselves. However, Redstone is known to support the deal.
Her father had touted the first Viacom-CBS combination in 1999 this way: "With Viacom and CBS performing at the top of their games, the timing for this could not be better. We both saw that we could create a media giant and that's what we both set out to do."
He famously changed his tune in 2005 when he announced plans for resplitting the companies. Back then, the idea was for both companies' business portfolios to be more focused, in turn allowing their stocks to do better on their own. Viacom was seen as the growth company back then, while CBS was seen as the dividend-paying value play for investors. But CBS shares soon outperformed Viacom's and those of most other peers, and CBS started charging retransmission fees and developing other new revenue streams, while Viacom started facing ratings and carriage deal challenges in the digital age.
Observers say that Shari Redstone will want the joint management team to work together and prove that the combined company can provide financial upside and innovation in a competitive market that is changing quickly in the digital age.
She quoted her father in Tuesday's deal announcement, updated for the digital age, saying: "My father once said ‘content is king,’ and never has that been more true than today. Through CBS and Viacom’s shared passion for premium content and innovation, we will establish a world-class, multiplatform media organization that is well-positioned for growth in a rapidly transforming industry."
Management issues.
Until Leslie Moonves was forced to leave his role as chairman and CEO of CBS late last year amid sexual harassment allegations, the management setup of a combined CBS-Viacom was always a key sticking point in deal talks.
This time around, the two companies agreed on key executive suite issues: Viacom CEO Bob Bakish will run the combined firm as president and CEO, CBS CFO Christina Spade will serve as CFO, and acting CBS CEO Joe Ianniello will oversee the CBS-branded assets as chairman and CEO of CBS.
The management question will be key as the 1999 marriage ran into problems when chairman and CEO Sumner Redstone kept clashing with CBS boss Mel Karmazin, who was named president and COO of the combined firm. The result: Karmazin exited in 2004.
Some see the fact that the popular and jovial Bakish and the successful Ianniello seem committed to working together to make the combination a success as a key win, which provides management continuity and avoids seeing Ianniello leave with a big payout he could get if not named CEO of CBS. Gould, for one, predicted that with Ianniello sticking around, "the Street will put a higher multiple on the combined company."
Ianniello highlighted the momentum and opportunities of the two companies now and once they unite. "At CBS, we have outstanding momentum right now — creatively and operationally — and Viacom’s portfolio will help accelerate that progress," he said. And in a staff memo he focused on the team work, writing: "Bob [Bakish] and I will ensure a smooth and steady integration of our two great companies."
Bakish in announcing the deal also focused on the unifying aspects, saying: "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."
And he highlighted a continued focus on working with the interests of various groups in mind: "I couldn’t be more excited about the opportunities ahead for the combined company and all of our stakeholders — including consumers, the creative community, commercial partners, employees and, of course, our shareholders.”
And Bakish highlighted in a staff memo: "Very importantly to me, CBS and Viacom are also a great fit. ... Make no mistake, together we aren’t just bigger — we are much, much better."
###
From Variety:
CBS All Access and Pluto TV? A CBS-Viacom Streaming Strategy Must Now Take Shape
Two households alike in dignity, once star-crossed Viacom and CBS are now set to enter yet another union, this one perhaps less brief than their last. Their imminent integration as ViacomCBS raises a number of questions to be answered in the coming days – that of synergies, executive leadership and overarching strategy.
With CBS and Viacom making official Tuesday their plans to once again merge, one particular question, in this age of streaming-service matchups, is what will become of their over-the-top platforms. Viacom and CBS are something near opposites in the streaming sphere. Where CBS has invested in creating a dual paid subscription video-on-demand offering in the form of CBS All Access and Showtime, Viacom’s path has thus far been an inversion of its new partner, primarily pursuing an ad-supported free path after acquiring Pluto TV earlier this year.
Soon-to-be ViacomCBS chief Bob Bakish and CBS head Joe Ianniello addressed some of those concerns on the investor call after the close Tuesday.
Contrary to what some had predicted, the top execs indicated that there would be cross-platform integration of CBS and Viacom’s media brands, with potential for Nickelodeon, BET, MTV and Comedy Central shows to appear on CBS All Access, and for Paramount films to air on premium cable Showtime. The same goes for beefing up Viacom’s free, ad-supported platform Pluto TV with series from CBS Sports HQ and ET Live.
“Mass is better, scale is better – so it’s better if they’re together,” Needham media analyst Laura Martin told Variety back in June, ahead of the announced merger.
Should CBS All Access harvest Viacom’s younger-skewing media brands, it would mean a product that has the potential to capture an incredibly broad demographic spectrum, from the MTV crowd to “NCIS” loyalists.
Martin sees the two entertainment conglomerates’ brands as being “perfectly complementary,” with synergies to be realized if streaming teams are merged and platforms are consolidated.
To recap: CBS All Access’ muscular, albeit insular, platform is made up entirely of shows from its own flagship linear network (the “NCIS” franchise, “The Big Bang Theory,” “The Late Show With Stephen Colbert”) and exclusive, online-only originals (“The Good Fight,” “Star Trek: Discovery,” “Tell Me a Story”), offering a limited-commercial tier for $5.99 a month and an ad-free tier for $9.99 a month. Its sister service, Showtime OTT, is an extension of the premium cable network that features shows such as “Billions” and “Desus & Mero.”
Combined, CBS All Access and Showtime have a healthy paying subscriber base, eight million strong – a goal achieved nearly two years ahead of time, executives there will tell you – with an ambitious target of 25 million subs, not including its international or ad-supported services, by 2020.
CBS’ presence in the ad-supported video realm is less high profile, but consists of a varied portfolio that includes news-focused CBSN, local news-focused CBS Local, CBS Sports HQ and ET Live.
Viacom, meanwhile, headlines its streaming efforts with recently acquired Pluto TV, which is completely ad-supported and free of charge. The service boasts over 150 content suppliers – a wide-ranging lot that includes everything from Bloomberg to Fox Sports to a channel dedicated solely to old episodes of “Wahlburgers” – and a deep library of its own shows and movies from its MTV, Comedy Central, Nickelodeon, BET and Spike brands.
Fresh episodes of shows that air on Viacom’s linear channels come to Pluto TV a whole 18 months later, making it clear that the service’s raison d’etre is not to replace traditional TV watching but to supplement it. Viacom is investing in its growth and attractiveness to viewers; the company has notably shifted its strategy, forgoing licensing its library content to other SVOD services in favor of beefing up Pluto with those properties.
Pluto TV has grown to 18 million monthly active users, up from the 12 million-plus at the time of its acquisition announcement in January. Bakish said on the company’s Q2 earnings call in May that there would be “tens of millions” of Pluto TV-enabled devices coming online in the following months, expressing bullishness about the platform’s future.
Viacom’s presence in paid subscription services includes kid-friendly Noggin – which has 2.5 million paid subscribers globally – and older-kid-friendly NickHits, plus MTV Hits and Comedy Central Now. The latter three channels can mostly be accessed via services such as Amazon Channels and the forthcoming Apple TV direct-to-consumer platform. Viacom’s primary new effort to gain ground in the direct-to-consumer pay-TV market is its BET-branded streamer, which will launch later in the year.
On the studio side, Viacom has previously signaled that it is happy to use its studios to provide shows and movies to other platforms – think AwesomenessTV-produced “To All the Boys I’ve Loved Before” for Netflix – as it concentrates on monetizing library content via Pluto TV, which it plans to expand internationally. The merger call Tuesday revealed that Bakish plans to use the combined ViacomCBS to be a hearty supplier of third-party content to MPVDs as well as broadcast, cable and streaming platforms.
CBS, meanwhile, is aggressively pursuing content for its own services, anticipating an $8 billion-plus investment in programming this year. Its online division has the technological infrastructure to withstand the addition of a few extra properties to its existing 38 brands, regardless of how they become integrated.
Leadership at the newly named ViacomCBS Inc. will likely spend some time in the coming months nailing the details of a forward-looking digital strategy that can keep and attract subscribers, amid the soon-to-launch streamers from Disney, WarnerMedia and NBCUniversal, not to mention established streaming pure-play Netflix.
Even the strongest players should be primed to keep their elbows out.
“People are willing to lose money to stay in the game,” said Cowen analyst Doug Creutz.
###
From Variety:
Viacom, CBS Shares Dip as Market Tumbles
Shares of both Viacom and CBS fell Wednesday as an overwhelmingly negative market offset enthusiasm for the merger the two companies announced the day before.
Shares of Viacom were off $2.05, or 7.04%, in early trading, down to $27.16 from $29.21. Shares of CBS, meanwhile, were off $3.37, or 6.92%, down to $45.49 from $47.54.
The Dow Jones Industrial Average plummeted Wednesday after investors were spooked by the bond market as well as weak economic data from Germany and China.
During an investor call Tuesday, executives from both companies made their pitch for the power of the combined entity, which would operate the CBS television network, the Showtime pay-cable service, the Paramount movie studio and the Nickelodeon kids-media unit. They suggested the company could capture more revenue from a new emphasis on streaming video, advanced advertising and affiliate revenue.
Wall Street analysts see the rationale for the deal, but have cautioned against too much optimism about it. “Judging by the tepid and languid reaction, the new company will have to work extra hard to prove the financial merits of this combination,” said Michael Nathanson, a media analyst with MoffettNathanson. Others see a need for the combined company to keep buying more assets to stay competitive. “The firm may need to continue to bulk up via M&A to compete with its much larger peers like Disney, WarnerMedia, and NBCUniversal,” said Neil Mackler, a senior equity analyst at Morningstar.
Investor Mario Gabelli said his funds hold about 5 million preferred voting shares in Viacom, the shares that give the Redstone family, which governs both companies through its National Amusements Inc. movie-exhibition firm, iron-clad control of both CBS and Viacom. He was not happy to see the preferred Viacom shares valued at the same rate as the non-voting shares.
“From the big picture view, I’m glad they got it done. I need a little extra juice for the voting stock,” Gabelli told Variety on Wednesday. He said he planned to reach out to the company and explore his legal options according to Delaware law, where Viacom is incorporated. But he said he would also be realistic about weighing the cost of litigation versus the return. “Even if they gave me $3 more a share, that’s about a quarter of the severance of the CEOs that have left. This is not anything that anybody is going to worry about,” he said.
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From TrekMovie.com:
ViacomCBS Heads Talk Leveraging Star Trek, Expanding All Access With Nickelodeon, And More
After the closing bell on Wall Street, the leadership of the merged entity, that will be called ViacomCBS, held a conference call with the investment press where they touted the benefits of the merger of CBS and Viacom, announced earlier in the day. Mixed in with the corporate jargon was some talk of interest to Star Trek fans.
Leveraging Star Trek
As noted in the announcement, reuniting the TV and film rights for Star Trek and Mission: Impossible were both cited as rationales for the merger of CBS and Viacom. New ViacomCBS CEO Bob Bakish expanded a bit on this in his discussion with the investment press when touting the combined library of the newly merged company:
We will have one of the largest libraries of iconic intellectual property, including more than 140,000 premium television episodes and over 3,600 film titles. Notably, this library reunites TV and film rights for some of our most popular franchises, including Star Trek and Mission: Impossible. And we see significant potential to better leverage these and other properties across platforms and assets, including film, television, live events, recreation and consumer products.
And TrekMovie isn’t the only outlet taking note of the re-unification of Star Trek. This afternoon Hollywood trade Deadline ran a post-merger announcement piece titled “‘Star Trek’ Poised To Become New Marvel As CBS & Viacom Merger Brings Franchise Under One Fleet,” which took note of Bakish’s mention of leveraging Trek. Deadline also offers this analysis:
The new multi-platform possibilities of corporate upsizing may mean Trek could soon be making a giant leap in its aspirations, not unlike the one in the 1980s and 1990s that elevated Star Wars from a blockbuster film franchise to the ubiquitous, wall-to-wall cultural force that it represents today. As we all know, money has a way of enhancing a proposition. In that vein, the Star Trek braintrust has already acknowledged that the animation push is viewed as a way to enhance the brand’s toy business and to win the hearts, minds and allowance money of kids – another page from a now Disney-owned that Lucasfilm used to masterful effect to build fan allegiance for characters that weren’t in the original film trilogy.
Viacom content could be coming to All Access soon
One beneficiary of the merger could be CBS’ subscription streaming services, including CBS All Access, home of Star Trek: Discovery and other upcoming Star Trek shows. During the same call CBS CEO Joseph Ianniello discussed how the deal will help plans for the growth of these services, saying:
This deal will allow us to share our premium content and marque brands in order to drive growth… Just think about adding content from Nickelodeon, BET, MTV, and Comedy Central to CBS All Access, and Paramount movies to Showtime.
Adding content from those libraries could greatly increase the available content for CBS All Access, helping it compete in the “streaming wars,” especially with competition coming from new services from Disney, NBC Universal, and Warner Media. Nickelodeon content could be especially important facing off with Disney+. Just last week CBS announced they were adding kid’s content to CBS All Access with a new deal with DHX Media which would include 1,000 episodes of library content and new episodes of Danger Mouse and Cloudy with a Chance of Meatballs. Ianniello noted that the merger puts them in a whole new league: “We were talking before about 1,000 hours of kids programming, well now we have the best in the world with the number one kid’s brand in the world.”
There is also a Star Trek connection to all of this since CBS is developing an animated kid’s Trek cartoon for Nickelodeon. Given what Ianniello discussed today, there is a good chance the yet-to-be-named Star Trek animated show for Nickelodeon may end up on All Access as well.
Bakish also noted that CBS library content is also expected to move to Pluto TV, the free ad-supported streaming service Viacom purchased earlier this year. The service has no original programming, however, Viacom has already started to leverage the platform with library content from its MTV and Comedy Central libraries. It’s possible that the back catalog of classic Star Trek shows could end up on Pluto as well.
While the announcement stated that the merger is expected to close at the end of the year, Bakish indicated some of this new leveraging of content back and forth could start sooner, saying:
There is nothing at all preventing us from moving forward in terms of beginning to unlock that opportunity in the very near future. Obviously, it is something we will build on over time, but there is some low-hanging fruit there that we will seek to pick quite soon.
CBS’ streaming services will soon benefit from the Viacom library of content.
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From CNET:
CBS, Viacom to reunite in merger that creates roughly $30B company
The combo will speed up efforts in streaming, the companies say.
CBS and Viacom, two television programming companies that split more than a decade ago, finalized a merger deal Tuesday to recombine, creating a single entity with about $30 billion in market value. The new company, which will be called ViacomCBS, brings brands like CBS and Showtime together with the likes of Nickelodeon, MTV, BET, Comedy Central and Paramount.
A CBS-Viacom reunion is the latest in a wave of mergers and acquisitions of traditional media companies, as they try to come to grips with the scale of their emerging competitors in the tech world. Netflix and YouTube dominate eyeballs online, and companies like Apple and Amazon, with market caps hovering around $1 trillion, are delving more deeply into video programming. In response, legacy media companies are consolidating to bulk up.
Following megadeals like AT&T buying Time Warner and Disney taking over Fox, CBS and Viacom become the latest to turn to M&A as they face a changing landscape where streaming's on the rise and traditional pay-TV is slipping.
(Disclosure: CBS Corp. is the parent of CNET.)
During a call with analysts, executives said they hoped to bulk up CBS All Access with kids programming from Viacom, which owns Nickelodeon. Executives added that they continue to like the idea of pricing CBS All Access under $10 a month because they remain interested in driving up subscribers.
One of the key motivations for combining, they said in a joint release, was streaming video. CBS and Viacom said a merged company would be in a better position to accelerate a "direct-to-consumer" strategy -- industry jargon for streaming services that don't involve any traditional TV distributor like a cable company. The companies collectively operate CBS All Access and Showtime's streaming option, along with Pluto TV (a free streaming TV service in the US) and newcomers such as CBSN, ET Live and niche players like Noggin. They noted that the merger could give them opportunities to expand their streaming internationally.
The companies also said their merger will improve opportunities in advertising and deals with distributors and create a stronger player to license their catalog to other platforms worldwide.
The companies said they expect the deal, which still needs to win regulatory approval and clear other conditions, will close by the end of this year. Viacom shares will be converted into shares of CBS, with CBS shareholders owning about 61% of the combined company, and Viacom the rest.
Viacom's head, Bob Bakish, will lead the combined company as president and CEO, while CBS's leader, Joe Ianniello, will serve as chairman and CEO of CBS proper.
"Our unique ability to produce premium and popular content for global audiences at scale -- for our own platforms and for our partners around the world -- will enable us to maximize our business for today, while positioning us to lead for years to come," Bakish said in a statement.
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From TheWrap:
Viacom-CBS Merger: ‘Star Trek’ Fans Win, Viacom’s Streaming Services Lose and More Takeaways
Plus: Other winners and losers from Viacom and CBS getting back together
It finally happened on Tuesday. After years of false starts, CBS and Viacom finally announced their intentions to get back together.
The all-stock deal, which values Viacom at $12 billion, puts Bob Bakish as the head of the newly-named ViacomCBS, with Joe Ianniello staying on board as the CEO of all CBS-branded assets. The agreement puts the CBS broadcast network, Viacom’s stable of cable channels like MTV and Nickelodeon, and the Paramount film and TV studio under one roof.
Below, TheWrap sizes up the winners and losers from Tuesday’s long-awaited announcement.
Winner: Shari Redstone
Bob Bakish may have gotten the keys to the kingdom but make no mistake: Shari Redstone comes out the biggest winner of Tuesday’s announcement. She completed her three-years-long quest to reunite CBS and Viacom, which had been separated since 2006. She is chairman of the board and got to install her hand-picked guy as chief executive. The question for her now is what will she do for an encore?
Loser: Les Moonves
Moonves is already persona-non-grata following his ugly exit from CBS after being accused by dozens of women for sexual misconduct. Before that however, he waged a legal war against Redstone to try and stop this merger from ever happening, so his legacy is even further tarnished now.
Winner: Bob Bakish
It’s been quite a rise for Bakish, who started on the international side of Viacom’s business and has been a favorite of Redstone. He is credited with turning around Viacom following the disastrous tenure of Phillipe Dauman, and is poised to have greater sway in the ever-changing industry. But with that comes more pressure, because he better deliver for Redstone. As Biggie once said: Heavy lies the crown.
Winner/Loser: Joe Ianniello
Ianniello finally gets the interim tag removed his CEO, but it comes with a catch: He is in a charge of a CBS that is under Bakish. He helped steer CBS through a tough time following Moonves’ ouster and remains a key figure, signing a new contract that takes him through 2021. While both execs are playing nice following Tuesday’s announcement — Ianniello will steer CBS-branded assets, but those now exclude Showtime and Pop TV — it has to sting a little bit for Ianniello not to be the top executive.
Loser: Consumers Wary of Consolidation
After Disney bought Fox and AT&T bought Time Warner, consumers were already feeling uneasy about so few companies being in charge of so many entertainment operations. With CBS, MTV, Nickelodeon, Comedy Central and Paramount Pictures now moving under roof, they might need to reach for the Pepto right now.
Winner: Star Trek fans
But there might be one specific consumer group that should be celebrating Tuesday’s merger: Star Trek fans. While CBS All Access has been ramping up its “Star Trek” output, the fan-favorite IP has been stuck between two worlds: CBS TV Studios owned the TV rights, while Paramount owned the film rights. ViacomCBS can now turn Star Trek into something that could one day rival what Marvel has achieved under Disney.
Winner: CBS All Access
ViacomCBS executives were pretty evasive about what exactly they will do with their many disparate streaming assets, but no matter the outcome, CBS All Access is about to be infused with a bevy of new content, most notably Nickelodeon’s popular kids’ programs. The streaming service has been a priority for CBS Corp. as it tries to compete in the streaming game. It figures to be the centerpiece of whatever comes next, and CBS Interactive CEO Jim Lanzone will be relied on a lot.
Loser: Viacom’s Other Streaming Options Like Pluto TV and BET+
On the other side, it’s unclear about the fate of Viacom’s streaming options, which include the free streaming app Pluto TV and the upcoming BET+. ViacomCBS execs hinted that Viacom programming will be available on CBS All Access, which could make PlutoTV redundant. It will depend how important having a free option for consumers is to the company. BET+, which won’t launch until this fall, could easily slide into All Access, which would surely love to have Tyler Perry in its stable.
Winner: David Nevins — Nevins becomes another executive who is sitting pretty right now. Already taking on a larger role in CBS Corp., with Bakish and (for now) Ianniello as the top business-focused executives at ViacomCBS, Nevins figures to the be chief creative at the larger company. Though for now, he’ll have to answer to both Bakish and Ianniello – with Showtime moving under Viacom’s purview.
Loser: Other Top Viacom TV Leadership — Viacom restructured last year, which reduced its brand groups from five to four, and now could face even further consolidation. Kent Alterman, who gained Paramount Network oversight in that move, is well-liked at Viacom, and Brian Robbins is new at Nickelodeon. But along with Chris McCarthy (MTV) and Scott Mills (BET), this could be a case of too many cooks in the kitchen. At very least they’re all under one more layer of executive leadership.
Loser: CBS/Viacom Employees — Layoffs are a sad byproduct of these large corporate mergers. It may not be as bloody as when Disney took the hatchet to Fox’s film divisions, but a lot of people are unfortunately going to find themselves expendable. ViacomCBS projects $500 million in synergy savings, some of which will come through the elimination of overlapping corporate operations.
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From Dark Horizons:
ViacomCBS Duo Tease Streaming Content Plans
ViacomCBS is here, the merged entity of Viacom and CBS, and as a result a new streaming giant is entering the arena with an impressively merged content portfolio to be spread across paid subscription and free ad-supported platforms.
On an investor call to discuss the merger late Tuesday, CEO Bob Bakish and CBS head Joe Ianniello went into some further details about what the merger will mean for the consumer and for the company’s revenue with plans for a “powerful DTC (direct-to-consumer) ecosystem, which will allow us to serve consumers at different price points”.
As reported yesterday, the merged library encompasses 140,000 episodes of television and over 3,600 movie titles. Ianniello offered a hint of how they’ll be divided up:
“Just think about adding content from Nickelodeon, BET, MTV, Comedy Central to CBS All Access, and Paramount movies to Showtime. And also imagine our [ad-supported video on demand] properties like CBS Sports HQ and ET Live being added to Pluto [TV]. Plus, all of this will increasingly be done on a global basis.”
CBS All Access and Showtime together have 8 million paying subscribers combined, a number they hope to raise to 25 million by 2022. Viacom owns the ad-supported Pluto TV which has 18 million users and around 150 content suppliers offering viewing free of charge. CBS’ ad-supported sports, news and entertainment services will also bolster numbers. Affiliate fees and advertising are set to offer two additional income drivers.
Bulking up CBS All Access is important and Bakish indicates that, unlike with Disney’s more cautious approach to utilising Fox’s properties, CBS and Viacom aren’t hesitating to exploit each other’s IP as soon as possible:
“There is nothing at all preventing us from moving forward in terms of unlocking that opportunity in the very near future. [There’s] low hanging fruit there that we will seek to pick quite soon.”
More cautious is how they’ll re-price everything. Asked if they will re-consider the price of CBS All Access, which currently ranges from $6-10 a month, Ianniello only says they will take a ‘slow and steady’ approach as they grow subscriptions.
Also with the likes of CBS Television Studios, Paramount TV, Nickelodeon’s animation arm, Viacom International Studios and Paramount Pictures in their pocket, the new entity will also produce third party content for broadcasters, cablers and streamers ranging from Comcast to Netflix to Facebook.
Bakish, like Shari Redstone earlier this week, also indicated the company may make more acquisitions with speculation rife that Discovery, Lionsgate/Starz or AMC will be snatched up.
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From Variety:
ViacomCBS Sees ‘Powerful’ Streaming Platform, Billions in Upside Post-Merger
A newly formed streaming giant is entering the ring as Viacom and CBS — now known as ViacomCBS — prepare to merge their content portfolios that include both paid subscription and free ad-supported platforms. The result, says CEO Bob Bakish, will be a “powerful DTC ecosystem, which will allow us to serve consumers at different price points.”
On an investor call to discuss the merger after the market close on Tuesday, Bakish and CBS head Joe Ianniello indicated that they will rely on a merged library that now encompasses 140,000 episodes of television and over 3,600 movie titles to drive the combined company’s revenues higher and capture more viewers.
“Just think about adding content from Nickelodeon, BET, MTV, Comedy Central to CBS All Access, and Paramount movies to Showtime,” said Ianniello, who will become CBS’ chairman-CEO after the transaction, of the two SVODs. “And also imagine our [ad-supported video on demand] properties like CBS Sports HQ and ET Live being added to Pluto [TV]. Plus, all of this will increasingly be done on a global basis.”
CBS All Access and Showtime together have eight million paying subscribers, a figure execs hope to push to 25 million by 2022. As Disney, WarnerMedia and NBCUniversal prepare to launch their streaming platforms, backed by vast libraries of their own, bulking up the relatively insular All Access — which presently only carries CBS content like “NCIS” and “Star Trek: Discovery” — appears to be something of a necessity. Bakish also emphasized the potential of the “Star Trek” and “Mission: Impossible” franchises under the ViacomCBS umbrella going forward.
Viacom’s recently acquired AVOD Pluto TV, which has 18 million users and around 150 content suppliers, offers viewing free of charge. Adding CBS’ ad-supported sports, news and entertainment services will likewise bolster its appeal.
Expect such crossovers to happen sooner rather than later.
“There is nothing at all preventing us from moving forward in terms of unlocking that opportunity in the very near future,” said Bakish, adding that there is “low hanging fruit there that we will seek to pick quite soon.”
When asked by an analyst whether they are re-considering the price of CBS All Access, which currently ranges from $6 to $10 a month, Ianniello sidestepped the question, saying that they will take a “slow and steady” approach as they grow subscriptions.
Bakish and Ianniello’s direct-to-consumer plans are just one branch of a three-pronged attack designed to achieve “billions of dollars of upside,” that also includes affiliate fees and advertising as two additional drivers.
On the affiliate front, “CBS and Viacom together will have a 22% share of TV viewership, yet right now, we only receive 11% of the industry’s affiliate fees that are paid to content providers,” said Ianniello. “This means the combined company will have tremendous upside in affiliate revenue.”
Equipped with an array of TV and film studios that span CBS Television Studios, Paramount TV, Nickelodeon’s animation arm, Viacom International Studios and Paramount Pictures, Bakish said that the combined entity will be able to feed rising demand for third party content, checking off MPVDs, broadcasters, cablers and streamers from Comcast to Fox to Netflix to Facebook.
And Bakish has indicated that the company may continue to be in acquisitive mode, with speculation abounding that the company may eye smaller media brands such as Discovery, Lionsgate or AMC.
“The combined company will be one of only a few with the breadth and depth of content and platforms, and the global reach, to shape the future of the industry,” said Bakish.
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From Kidscreen:
What the ViacomCBS merger means for kids content
Following the media merger that brings together Nickelodeon and CBS All Access’s new kids content, media analysts from Dubit, KidsKnowBest and Ampere Analysis weigh in on what’s next.
American media company CBS has reached an agreement to acquire Viacom, merging the two into ViacomCBS. The all stock-merger creates a combined company with more than US$28 billion in revenue.
Viacom president and CEO Bob Bakish will be president and CEO of the ViacomCBS, while CBS’ president and CEO will shift to being the chairman and CEO of CBS, overseeing all CBS-branded assets. The team will also consist of Christina Spade as EVP and CFO, and Christa D’Alimonte as EVP, general counsel and secretary. Shari Redstone is the chairman of ViacomCBS.
The deal is expected to close by the end of the year, and the combined entity plans to save US$500 million within two years by eliminating overlapping operations and other initiatives.
The content portfolio for the merged company now includes Nickelodeon, Paramount, Showtime, Comedy Central, CBS, MTV, CW and several regional broadcasters. The combined companies have spent more than US$13 billion in the last 12 months on content and plan to continue those efforts across its portfolio.
But the big question hanging in the air is what does this merger means for the kids content space?
ViacomCBS will now oversees Nickelodeon, Channel 5′s preschool block Milkshake! and all of CBS All Access’ new kids content efforts, just announced last week.
“What I find amazing is the scale of the combined organization,” says acting head of research for kid research company Dubit Adam Woodgate.
Together, the two companies have some 140,000 episodes of TV series and 3,600 film series. ViacomCBS combined platforms account for 22% of all television viewing in the US—bigger than Comcast (18%) and Disney (14%), according to Dubit.
“It will be interesting to see if the [merged companies] pursue further [company] acquisitions as well,” says Woodgate.
From an immediate, day-to-day perspective, the merger isn’t likely to affect Nickelodeon to a large degree, says Pete Robinson, chief operating officer at KidsKnowBest. If anything this just gives Nickelodeon more of a chance to shine, he says. “The one thing Nickelodeon and Nick Jr. do better than anyone else is create consumer product blockbusters from linear TV shows. This gives them access to CBS’ own younger skewing brands [Star Trek, Riverdale and The Big Bang Theory], which can be exploited,” says Robinson.
However, the merger outlook isn’t all rosy: While Nickelodeon has a very clearly defined brand and outlook, the recently launched kids content on CBS All Access has a less clear focus. Combined, the direction ViacomCBS is likely to take is muddled.
“I don’t see how it all fits together across the multiple platforms, business models and trenches of kids content,” Robinson says. “But if they collect data on which brands across each platform create meaningful audience relationships, they may continue to grow niche and mainstream among broader audiences.”
Ultimately, this is a battle for eyeballs, more than anything else.
“Viacom and CBS needed more clout,” he adds. “This should make it more competitive by increasing its audience reach across demographics in both channels and brands.”
Meanwhile, what the merger means for the streaming space is a whole other story entirely. It’s fairly well reported that kids content keeps people paying for SVOD services month to month and stops adults cancelling a subscription after they’ve caught up on their favorite show. But whether this is enough to compete in the streaming space, or if ViacomCBS even wants to compete at this point, remains to be seen.
The research director at London-based market research firm Ampere Analysis Guy Bisson thinks that it’s likely the merged company pursues a global streaming approach in the future, similar to Disney’s approach, rather than licensing its content to third-parties like CBS previously has done with shows such as Riverdale and Nickelodeon has been doing through its original animated film deal with Netflix for Rise of the Teenage Mutant Ninja Turtles and The Loud House feature movies.
“Scale will allow ViacomCBS to roll out more of its direct-to-consumer brands globally and that will most definitely include kids brands,” says Bisson. “But this won’t happen overnight.”
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From Digital TV Europe:
OTT platforms to benefit from CBS/Viacom merger “in the very near future”
The OTT platforms of ViacomCBS will see a boost from the just-concluded merger “quite soon”, the company’s top execs have confirmed.
Speaking on a conference call, CBS chairman and CEO Joe Ianniello identified direct-to-consumer streaming as one of the company’s key pillars of growth, and said that the breadth of content made available by the deal will serve as a boost for its OTT platforms.
“This deal will allow us to share our premium content and marquee brands in order to drive growth in both these areas,” said Ianniello. “Just think about getting content from Nickelodeon, BET, MTV and Comedy Central to CBS All Access and Paramount movies to Showtime. And also imagine our AVOD properties like CBS sports HQ and ET Live being added to Pluto.”
“Plus all of this will increasingly be done on a global basis where the combined company will have the best of both worlds, premium US programming that seamlessly travels across borders and hundreds of thousands of hours of locally produced international programming, all available with a click of a button.”
Bob Bakish, ViacomCBS CEO, echoed these sentiments, highlighting the acceleration of its direct-to-consumer offerings as “the first part of our strategy.”
“From the start, we will have a compelling portfolio of streaming products that include subscription and ad-based offerings,” Bakish said. “These include CBS All Access and Showtime OTT, which deliver premium branded content live and on-demand to millions of subscribers. They also include Pluto TV, the leading free streaming TV service in the US as well as niche subscription products like Noggin and our forthcoming BET+.
“This mix creates a powerful D2C ecosystem, which will allow us to serve consumers at different price points while enabling portfolio cross-selling. This includes using our free ad supported offerings as a powerful traffic funnel, a consumer entry point to upsell from as well as a place where we can catch and continue to create value from consumers taking a pause from subscription services.”
Responding to a question on how soon the content will be available to spread, Bakish clarified that there is “nothing at all” stopping the company from flexing its portfolio “in the very near future”. He added that “there is some low-hanging fruit there that we will seek to pick quite soon”.
The company will hope that this content share will give them a competitive edge against Netflix and put them in good standing ahead of WarnerMedia and Disney’s respective D2C launches later this year.
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From NPR via WGCU News:
Viacom And CBS Agree To Merge In $30B Deal
The corporate boards of Viacom and CBS agreed to merge in an all-stock deal Tuesday, reuniting the Redstone family's entertainment holdings after a series of legal battles and corporate intrigues.
The move is intended to enable the blended company valued at about $30 billion to fight off bulked-up competitors and a new threat from digital rivals with well-financed streaming services.
Viacom Chief Executive Bob Bakish is to oversee the new company, which will be called ViacomCBS. The deal would combine such well-known entertainment brands as CBS and Showtime with Viacom's Paramount television and movie studios, Nickelodeon, Comedy Central and MTV.
CBS also owns the book publisher Simon & Schuster. Current CBS CEO Joe Ianiello is to oversee the former CBS properties under Bakish.
"Our unique ability to produce premium and polar content for global audiences at scale - for our platforms and for our partners around the world - will enable us to maximize our business for today, while positioning us to lead for tomorrow," Bakish said in a statement.
The new chairwoman of the combined company is to be Shari Redstone, who controls the family's holding company, National Amusements, along with her 96-year-old father, Sumner Redstone. While Viacom and CBS are publicly traded, they are both controlled by the family through National Amusements.
It would seem unlikely that the merger would be blocked by federal regulators or antitrust lawyers. Viacom and CBS are largely not direct competitors, and the U.S. Justice Department recently lost its challenge to the AT&T takeover of Time Warner.
Yet even if the deal goes through, and even at its new heft, the new Viacom would remain on the smaller side.
Comcast, the parent of NBC and Universal, and AT&T, after its takeover of Time Warner and CNN, each combine Hollywood firepower with critical communication services via cable and the Internet as well as digital phones and mobile phones. They are vastly larger than ViacomCBS would be.
So too is the new Disney, further bolstered by its recent acquisition of much of Fox's entertainment holdings, including the Star Wars and Marvel franchises.
Like Disney, AT&T is moving aggressively to create a new entertainment streaming service. For AT&T, the service will focus on the DC comic books superhero franchises, its HBO programs and films, as well as its cartoon and movie archives.
Yet many are watching the nation's leading digital giants with great concern. Amazon and Netflix have dipped into seemingly bottomless wallets to draw creative talent away from conventional networks and studios, encouraging Americans to sever their cable subscriptions with a wealth of new shows. Apple is also embarking on offering original television content as well (it has had paid streaming services for years).
CBS has moved on streaming more than its broadcast rivals, with a digital 24-hour news service called CBSN and a paid entertainment streaming service. That service, called CBS All Access, has enjoyed some modest success with hits such as The Good Fight and a renewal of the Star Trek franchise.
Sumner Redstone split CBS from Viacom in January 2006 in the belief it would unshackle the more profitable entertainment vehicle Viacom from the lagging, old school network television divisions of CBS. As it happened, CBS proved the more dynamic company under Les Moonves, then CEO and later chairman.
As Sumner Redstone aged, Shari Redstone had to battle with her father's former girlfriends and his executives to ensure her position. CBS, led by Moonves, fought in the boardroom and courtroom to dilute the voting stake of National Amusements to prevent her gaining control of the company. But Moonves was derailed by a sexual assault and harassment scandal, which led to his firing. (He has denied the accusations.)
With Moonves gone, the path to the reunification of the two wings of the Redstone entertainment empire was far smoother. The more pressing problem now is that the new ViacomCBS may not be big enough to hold off its rivals in Hollywood or Silicon Valley. If it does not successfuly acquire other properties, the merged company may have just made itself appealing enough to be bought by a larger player, like Amazon — which doesn't have a network — or Verizon, which lacks any major TV presence.
Copyright 2019 NPR. To see more, visit https://www.npr.org.
AILSA CHANG, HOST:
Soon, one mega entertainment company may be bringing us "Dora The Explorer," "The Daily Show" and "60 Minutes." Viacom and CBS said today that they are merging. Together, they are going to create a $30 billion giant. NPR media correspondent David Folkenflik joins us now from New York with the details.
Hey, David.
DAVID FOLKENFLIK, BYLINE: Hey, Ailsa.
CHANG: So can you just give us a picture of what this combined CBS-Viacom behemoth will look like?
FOLKENFLIK: Yeah. From any objective standard, they got a whole lot of properties. Under the same roof, you'll have CBS network, CBS News, you'll have Showtime, the entertainment premium channel on cable, you'll have Comedy Central, BET, Nickelodeon, MTV and Paramount Pictures and television studios as well.
CHANG: Man, phew (ph). And why are these already two huge companies merging now?
FOLKENFLIK: Well, the logic behind the deal - I think the best word for it is fear. Now, executives are putting a good face on it. We heard earlier this afternoon from Viacom CEO Bob Bakish on a call with analysts this afternoon. Here's what he had to say.
(SOUNDBITE OF ARCHIVED RECORDING)
BOB BAKISH: Simply put, the combined company will be one of only a few with the breadth and depth of content and platforms and the global reach to shape the future of the industry.
FOLKENFLIK: Bakish is going to be running the combined company, which they claim is going to be called ViacomCBS. You know, that may be true. They may be one of only a few, but there are a lot of others if you think about it. Think of Disney, which, you know, has the children's franchises like "The Lion King." It's got ESPN, the ABC network, a heck of a lot more and bought a lot of Rupert Murdoch's media empire, at least the entertainment parts at Fox. Think of Homer Simpson, think of the X-Men, think of cable channels like FX. And then there's these other giants - AT&T, Comcast - these guys are a combination of entertainment properties as well as ISP and telephone providers. And then up north, Silicon Valley - look at Amazon and Netflix, even soon Apple. You've got folks that seemingly have bottomless wallets to compete against. They're paying a lot of money to draw a lot of creative talent down there. And they're just so much bigger than even this combined Viacom will be.
CHANG: Sure. I also understand there's some interesting history here - right? - like the Redstone family has controlled both of these companies at various times. What role did any family drama play into this merger?
FOLKENFLIK: There's been a lot of drama. Sumner Redstone is in his mid-90s. He's the patriarch of National Amusements, the holding company that controls both of these companies. He split them apart effective in January of 2006. He wanted to unleash what he thought was the profit to be driven by the entertainment side over at Viacom. Actually, CBS performed much better. Shari Redstone had been his presumed successor, and yet he didn't want to let go. He had to fight with his former girlfriends. He had to fight with some of his executives over at CBS in the boardrooms, in the courtrooms, to make this happen. She prevailed. And ultimately, she was able to get these two companies to agree to merge once she was able to force out Les Moonves, who was felled in a sexual harassment and assault scandal. It's important to note he denies the allegations made against him.
CHANG: Right. Do you think the federal government is going to approve this merger?
FOLKENFLIK: I think they will. I mean, they basically gave the matador defense to the Disney takeover the entertainment properties of Fox. And the Justice Department lost its challenge to try to keep off the takeover of Time Warner and its properties, including CNN, by AT&T. So I think that you're going to look - probably going to be a light touch from federal regulators as Viacom and CBS don't really compete very much at all. I think the real challenge is is this combined ViacomCBS going to be big enough to compete in the world of streamers? They say they've got a lot of content to offer, and that's true. But if you look over at Disney, if you look at AT&T-Time Warner and you look up north to Silicon Valley, there are a lot of folks that have a lot of content that they're going to have to compete against.
CHANG: That's NPR media correspondent David Folkenflik.
Thanks so much, David.
FOLKENFLIK: You bet. Transcript provided by NPR, Copyright NPR.
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From Deadline:
CBS-Viacom Merger: Telenovelas, British Formats & Business Down Under, What The Tie-Up Means In The Rest Of The World
The fact that CBS-owned Showtime revealed at the end of last month that it was developing a U.S. version of Paramount TV and Viacom International Studio’s Argentinean comedy 100 Days To Fall In Love is undoubtedly a coincidence, but it also sums up what the two companies need to do globally following the long-awaited decision to merge.
There has already been huge focus on the merger from a domestic point of view, including what the C-suite will look like and how the various domestic assets will work together, but both businesses are also global giants with CBS generating around $2.5B in revenue outside the U.S. last year and Viacom generating around $2.2B.
Below, Deadline looks at the different global strategies and what the merger will mean internationally for the two companies’ slew of foreign divisions as they rebuild the House of Sumner.
In short, Viacom’s focus globally is based around the reach of its MTV, Nickelodeon and Comedy Central networks as well as its ownership of free-to-air networks Telefe in Latin America and Channel 5 in the UK and, more recently, free streaming service Pluto TV. Meanwhile, CBS’ international business has largely prioritized selling its slew of U.S. network dramas and comedies to foreign broadcasters, but in recent years has included ownership of Australia’s Network Ten and the roll-out of CBS All Access.
100 Days To Fall In Love comes from Viacom’s Telefe, which has been central to its growth after its purchase for $345M in 2016. The Argentine broadcaster airs over 3,000 hours of original content per year with a combination of high-volume and long-running telenovelas and shorter run, premium dramas. 100 Days To Fall In Love, which tells the story of a couple who take a 100 day break after a 20-year marriage, was a huge hit domestically, maintaining a 45% share across its 100+ episodes. It is also one of a number of projects that Telefe has used to open the door to the U.S., a strategy that included a partnership with Paramount TV for Nazi thriller Cazadores (Hunters), written by Narcos’ Jason George.
It’s pretty clear that Telefe, which Bob Bakish has previously called a “platform for global growth”, plays an important role in helping to contribute to the 325 series and 17,000 hours of content that the two companies produce in in 45 languages across 183 countries.
Similarly, in the UK, Channel 5, which Viacom acquired for $760M in 2014, has been a big driver. The network, which was formerly derided as a slightly down-market brand that once had the tagline “films, football and fxxking”, has grown over the last few years under content chief Ben Frow. Last year, it won its first ever BAFTA for Cruising With Jane McDonald and recently stepped up its scripted ambitions with a slew of original commissions including PBS co-pro All Creatures Great and Small. C5’s production division, which was recently rebranded from Elephant House Studios to Viacom International Studios UK, has also been stepping up with plans to move further into drama and children’s programming, having previously focused on reality fare such as Mexico-set reality series Make or Break.
VIS has also been growing in other areas including expansion across western and southern Europe, the Middle East and Africa with the appointment of Laura Abril, while its Latin American arm recently partnered with Paramount to remake Alfred Hitchcock’s To Catch A Thief.
In India, Viacom sold a 1%, controlling, stake in its Indian business Viacom18 to TV18, backed by Mukesh Ambani’s Reliance Industries, last year. Although the deal ceded control of the firm, which operates 42 channels, the hope is that over time it will ultimately add to its bottom line.
On the other side of the aisle, CBS makes a large part of its international revenues from the sale of its network, cable and digital originals to foreign broadcasters. Since the May Upfronts, it has been shopping its latest slate including Michelle and Robert King’s Evil, Walter Goggins’ comedy The Unicorn, Dick Wolf FBI spinoff and the return of 90210 (left). While these are the hot new titles – and every international acquisitions exec in the world seemingly wanted a picture of themselves with Jennie Garth at the LA Screenings – the company also derives huge value from its library of 70,000 hours, which includes evergreen shows such as NCIS and Blue Bloods, which continue to travel extremely well.
It would logically make sense for this unit, CBS Studios International, which is run by Armando Nunez, President and CEO of CBS Distribution Group, to ultimately house Viacom International Media Networks Programme Sales Group, a slightly less high-profile sales division that sells titles such as Nickelodeon’s SpongeBob Squarepants and formats such as Jersey Shore.
CBS has also started eyeing the global roll-out of its CBS All Access service, which airs originals such as The Good Fight and Twilight Zone, around the world. The platform airs in Canada and Australia and Joe Ianniello, who is now Chairman and CEO of CBS, has previously spoken about its intention to launch it in Latin America as well as certain territories in Europe.
Yesterday, the company highlighted the global opportunities of its direct-to-consumer businesses, claiming it could “expand globally by leveraging the existing strength in both subscription and ad-supported offerings, combined library, content production capabilities and international infrastructure.”
In Australia, CBS put a major marker in the sand after paying $197M to acquire Network Ten in November 2017. The move, which puts it in direct competition with Nine Network and Network Seven, gives it its first global terrestrial broadcaster, after having set up a range of smaller joint ventures with the likes of AMC Networks International over the years.
The new company may be able to leverage the two portfolios down under in a similar way to how Channel 5 in the UK has been able to use programming from Viacom’s pay portfolio, including Nickelodeon titles and Comedy Central’s Friends.
Brian Wieser, Global President, Business Intelligence of ad firm GroupM, highlighted Australia as one of the regions that could apply similar moves to the U.S. However, he said the benefits of international scale will be “modest initially”. “While parts of the two companies are internationally oriented… there are few countries where the transaction will likely have any near-term impact,” he added.
One question that will need to be answered by ViacomCBS bosses is who will ultimately lead this international charge? Will they merge the global businesses, bringing together Nunez’s operation with that of Viacom International Media Networks, which has been run by David Lynn since 2017, replacing Bakish when he became Viacom CEO, or will they keep them separate? It’s one of many questions that will need to be answered during the honeymoon period.
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From TBI Vision:
ViacomCBS eyes further acquisitions after merger
Discovery and Sony Entertainment have been mooted as potential targets for ViacomCBS as it looks to bolster the newly merged company with further acquisitions, following the creation of the $30bn outfit yesterday.
The long-awaited merger will see brands including CBS, Showtime, Nickelodeon, MTV, BET and Comedy Central coming under one roof, along with CBS Television Studios, Paramount Pictures, Network 10 in Australia, and Channel 5 in the UK.
The company will house around 140,000 TV episodes and 3,600 films, with more than 750 series currently ordered or set for production. More than $13bn has been spent by the firms on content over the past year, with shows such as Billions airing on Showtime and Star Trek: Discovery offered by CBS All Access.
However, ViacomCBS remains far smaller than rivals such as Netflix, WarnerMedia owner AT&T and Disney, valued at $137bn, $254bn and $247bn respectively, and on an earnings call yesterday execs from both Viacom and CBS admitted further acquisitions would be explored.
ViacomCBS chief Bob Bakish, who will lead the merged entity, said: “Both of us continue to look at opportunities in the marketplace and have executed on some of those in the past. This is something we’re going to continue to do.
“Speaking from Viacom’s perspective, we have done deals that have been effective accelerants to our strategy. And that’s something that we are going to look to on a combined company basis.”
Christina Spade, CBS’s chief financial officer, added that the newly formed company would “explore strategic transactions that enhance our content portfolio, accelerate our direct-to-consumer growth and strengthen our international footprint.”
CBS has recently been linked with Lionsgate-owned pay provider Starz while Viacom picked up AVOD service PlutoTV in February. Yesterday, Reuters reported that Shari Redstone, chairman of National Amusements – owner of close to 80% of CBS and Viacom voting shares – had considered potential deals with factual giant Discovery and Sony, although no talks have yet taken place.
Bakish also said ViacomCBS would ramp up its direct-to-consumer streaming offerings around the world but said the company would continue to sell its programming to companies such as Netflix, a strategy many of its rivals such as Disney have erred away from.
“Boosted by the strength of our combined library and production capabilities, we’ll be able to feed escalating demand for third-party content, serving a diverse global customer base,” he said.
Joe Ianniello, president and interim CEO at CBS, added that third-party licensing would continue “internationally and domestically” but he conceded that “[in] the longer term, obviously, the aspiration is to have global subscribers and really connect to the consumer.”
Bakish also said the two companies, which were previously brought together in 1999 but broken up seven years later, would share content: CBS programming will become available on AVOD offering Pluto, while Viacom shows will be offered via CBS’s SVOD services, once existing licensing deals ran their course.
“There is nothing at all preventing us from moving forward in terms of beginning to unlock that opportunity in the very near future,” he added. “Obviously, it’s something that we will build on over time. There is some low-hanging fruit there that we will seek to pick quite soon.”
Ianniello said CBS All Access would remain “competitively priced” and would offer around 1,000 hours of kids programming from Viacom. The CBS chief added that the company had been doing three-year deals “more and more”, rather than five-year arrangements, allowing it to “reset” relatively quickly.
Bakish added that All Access would join “a compelling portfolio of streaming products” that include subscription and ad-based offerings such as Showtime OTT, Pluto TV and niche services such as Noggin and forthcoming BET+.
“This mix creates a powerful D2C ecosystem, which will allow us to serve consumers at different price points while enabling portfolio cross-selling,” he said. “This includes using our free ad supported offerings as a powerful traffic funnel, a consumer entry point to upsell from as well as a place where we can catch and continue to create value from consumers taking a pause from subscription services.
“We also see significant cross-platform upside as the D2C portfolio benefits from the combined company’s content and marketing. And our expansive production capabilities and deep library assets have the potential to fuel a significant product that can be deployed all around the world, particularly as we’re able to take advantage of the international infrastructure that we already have in operation.”
###
From Associated Press Television News via Republic World:
Content Streaming Domain Set To Welcome CBS-Viacom Partnership
The newly combined ViacomCBS will invest in more movies and TV shows and try to sell more advertising as it seeks to become a bigger player in the growing business of streaming video.
Yet the bigger company still might not be big enough to be competitive, as larger rival Disney launches its own service in November and streaming pioneer Netflix spends even more on original shows and movies.
That isn’t stopping Viacom CEO Bob Bakish, who will lead the combined company, to declare that ViacomCBS will be “one of only a few companies with the breadth and depth of content and reach to shape the future of our industry.”
CBS and Viacom, which separated in 2006, announced their long-anticipated reunion Tuesday.
Viacom owns the Paramount Pictures movie studio and pay TV channels such as Comedy Central, MTV and BET, while CBS has a broadcast network, television stations, Showtime and a stake in The CW over-the-air network.
CBS was one of the first media companies to launch its own streaming service, CBS All Access. The $6-a-month service now has a new “Star Trek” series, a revival of “The Twilight Zone” and archives of old and current broadcast shows.
Now, Disney, Comcast’s NBCUniversal and AT&T’s WarnerMedia are jumping in with their own services as well to challenge Netflix, Amazon, Google and other tech companies encroaching into entertainment. To expand its library, Disney bought Fox’s entertainment businesses for $71 billion in March, while DirecTV owner AT&T bought Time Warner last year for $81 billion.
Acting CBS CEO Joe Ianniello, who will head the CBS business in the combined company, said in a call with analysts that the company might add content from Nickelodeon, BET, MTV and Comedy Central to CBS All Access and Paramount movies to Showtime. CBS’ ad-supported CBSSports HQ and ET Live could be added to Pluto TV.
And the company hopes to beef up its international offerings.
“The combined company will have the best of both worlds, premium U.S. programming that seamlessly travels across borders and hundreds of thousands of hours of locally produced international programming, all available with the click of a button,” he said.
Once the deal is completed, expected by the end of the year, ViacomCBS will have a combined library with more than 140,000 TV episodes and 3,600 film titles, including franchises such as “Star Trek” and “Mission: Impossible.”
The two companies have been major content spenders, having spent more than $13 billion combined in the past year, or close to the estimated $15 billion Netflix is expected to spend on content in 2019. The two companies have more than 750 series currently ordered or in production.
But the combined company will still be small. CBS has a market value of $18 billion and Viacom about $11.7 billion. Disney’s is nearly $245 billion and Netflix is at $136 billion.
CBS says All Access and its Showtime streaming services have 8 million subscribers combined. That’s far less than the 60 million U.S. subscribers that Netflix has, though it’s comparable with the estimated number of subscribers to HBO Now, that network’s stand-alone streaming service.
And the Paramount movie studio, despite hits like last year’s “A Quiet Place” and the latest “Mission: Impossible” sequel, has just 5% of this year’s market share at the box office. It hasn’t been in the top five since 2011.
Moody’s media analyst Neil Begley said ViacomCBS might have to consider other acquisitions to keep up. However, the number of possible targets is dwindling, he said, with what’s left mostly smaller companies such as the Discovery and the AMC television networks and the MGM and Lionsgate movie studios.
He said a big question will be whether the new company will focus on subscription offerings, such as CBS All Access and Showtime, or free, ad-supported ones, like the Viacom-owned Pluto TV. Or it may keep doing both.
“If you’re going in both directions, you’re hedging your bets, but are you pulling your punches on whatever the best strategy might have been?” Begley said.
The all-stock deal will give CBS shareholders about 61% of the combined company and Viacom shareholders the rest. The companies say the combined company will have $28 billion in revenue. By combining, the companies say they will save $500 million a year.
CBS and Viacom have had an on-again, off-again relationship.
After splitting in 2006, CBS and Viacom both remained controlled by National Amusements. Shari Redstone, daughter of media mogul Sumner Redstone, runs the holding company.
The split was a way to separate Viacom’s networks like MTV, Nickelodeon and BET, which were very successful at the time, from the slower growth of the CBS network.
But over time, the two companies’ fates were reversed. CBS under longtime chief Les Moonves became more profitable and Viacom struggled, hurt by weakness in its Paramount studio and people dropping cable in favor of streaming.
A recombination makes sense now because media companies are bulking up their content offerings to better compete for ad dollars. But Moonves was against the idea, as CBS was stronger and more profitable than Viacom.
Moonves’ ouster last year in the face of multiple sexual misconduct allegations changed the dynamic. Under an agreement, Shari Redstone agreed not to push for a reunion for at least two years, but that left open the possibility of CBS itself pushing for it.
Redstone will be chairwoman of the combined company’s board.
“We will establish a world-class, multiplatform media organization that is well-positioned for growth in a rapidly transforming industry,” Redstone said.
Viacom’s stock rose 2.4% and CBS 1.4% in trading Tuesday, a reflection of Wall Street having anticipated this deal, especially in recent days. Disney’s stock was up 1%, while Netflix gained less than 1%.
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From AdExchanger:
Viacom And CBS Will Go Big On Streaming Without Abandoning Ad-Supported Content
CBS and Viacom are (finally) back together, and that will create lots of opportunity for advertisers.
On Tuesday, after years of will-they-won’t-they corporate turmoil, the entertainment behemoths agreed to merge in an all-stock deal that values the combined company at around $30 billion, with $28 billion in annual revenue.
The new entity will be called – wait for it – ViacomCBS. It combines a portfolio of top-shelf content from CBS, Showtime, Nickelodeon, MTV, BET, Comedy Central and Paramount Network with a library of more than 140,000 TV episodes and 3,600 film titles.
The US Securities and Exchange Commission must still bless the deal, but there aren’t any obvious roadblocks to approval.
“CBS and Viacom will have the largest reach of any media company in the country,” Joe Ianniello, now permanent CEO and chairman of CBS, told investors during a conference call late Tuesday. “And when you combine that reach with our targeting capabilities and advanced advertising, the opportunity we’ll have together will be far greater than we would have from either company alone.”
Both Viacom and CBS come with advanced advertising and marketing solutions, including CBS Interactive, Viacom Vantage, which is a data-driven ad platform, and Viacom Velocity, a marketing and creative content team that sits within Viacom’s music and entertainment groups.
ViacomCBS has DTC streaming ambitions too, of course, but it’s also super-hot on ad-supported content and becoming “a first thought for advertisers and their agencies,” said Bob Bakish, Viacom’s former CEO, who will take the reins as president and CEO of the new entity.
In addition to the critical mass of Viacom and CBS under one roof, ViacomCBS won’t be shy with its checkbook to produce more content. Together, CBS and Viacom spent more than $13 billion on content in the last 12 months, and they’ve got 750 series either already ordered or in production.
That’s the sort of scale and beaucoup inventory that gets advertisers excited, particularly as everyone and their mother is gearing up to launch an ad-free subscription streaming service.
Although Viacom/CBS will obviously keep enough exclusive content to fuel its own streaming offerings, it’s also planning to license content from its library to third-party platforms globally, serving everyone from MVDPs, such as Comcast and Charter, and broadcast and cable networks like Fox and TBS, to Facebook Watch and other streaming platforms, including Netflix and Disney+.
And expect cross-pollination between ViacomCBS-owned properties and services to help boost subscriptions and viewership. Think Paramount movies via Showtime OTT, adding CBS Sports content to Pluto TV or bringing Nickelodeon content to CBS All Access.
“[We’re] using our free, ad-supported content offering as a powerful traffic funnel and consumer entry point to upsell from, as well as a place to continue to catch and get value from consumers taking a pause from a subscription platform,” Bakish said.
The Viacom/CBS merger reunites their respective assets for the first time since 2005, when media magnate Sumner Redstone, now 96, split them asunder after first bringing them together in 2000.
The elder Redstone’s daughter, Shari, who’s been steadfastly pushing for this deal for the last four years, will become chairman of ViacomCBS.
###
From Reuters:
Factbox: Merged CBS and Viacom aim to join U.S. media big league
(Reuters) - CBS Corp (CBS.N) and Viacom Inc (VIAB.O) on Tuesday reached a deal to reunite media mogul Sumner Redstone’s U.S. entertainment empire after 13 years apart.
The deal brings together CBS television network, CBS News, Showtime cable networks with MTV Networks, Nickelodeon, Comedy Central and the Paramount movie studios. Together, the company will own more than 140,000 TV episodes and more than 3,600 film titles.
The new company, ViacomCBS, will compete in an industry that has been reshaped after large-scale deals, including $85 billion purchase of Time Warner by AT&T (T.N) and Walt Disney’s (DIS.N) buyout of Twenty-First Century Fox Inc’s film and television assets.
Here is a list of six major media companies, their CEOs and the assets they own:
- AT&T (T.N):
Market Cap: $254.72 billion
CEO: Randall Stephenson, since May 2007
Brands: Turner TV networks, HBO, Cartoon Network, Warner Bros. Studios, CNN and DirecTV
- WALT DISNEY CO (DIS.N)
Market Cap: $246.81 billion
CEO: Robert Iger, since Sept 2005
Brands: The Walt Disney Studios, ABC Studios, National Geographic, ESPN, Marvel Studios, VICE, Lucasfilm Ltd, Pixar Animation Studios, 20th Century Fox Animations, Fox Family; Disney has plans to offer a bundle of its three streaming services starting in November: Disney+, ESPN+ and Hulu
- COMCAST CORP (CMCSA.O):
Market Cap: $197.53 billion
CEO: Brian Roberts, since Nov. 2002
Brands: NBC Universal, XFINITY, Sky, Comcast Cable, Universal theme parks, Comcast Spectacor
- NETFLIX INC (NFLX.O):
Market Cap: $136.73 billion
CEO: Reed Hastings, since Sept. 1998
Brands: Netflix streaming service, Netflix DVD rental, Orange is the New Black, Stranger Things, Black Mirror, 13 Reasons Why, Bodyguard
- FOX CORP (FOXA.O)
Market Cap: $12.43 billion
CEO: Lachlan Murdoch, since March 2019
Brands: Fox Broadcasting Company, Fox Business Network, Fox Television Stations, Fox News, Fox Sports
- DISCOVERY INC (DISCA.O)
Market Cap: $4.68 billion
CEO: David Zaslav, since Jan. 2007
Brands: TLC, Animal Planet, Discovery Kids, Oprah Winfrey Network
###
From NDTV Profit:
CBS, Viacom To Reunite With Plans For Bigger Role In Streaming TV Wars
The new company will be named ViacomCBS Inc, although CBS shareholders will own 61 per cent and Viacom shareholders will own 39 per cent.
CBS Corp and Viacom Inc have reached a deal to reunite media mogul Sumner Redstone's US entertainment empire, betting that a larger company will be able to compete and partner better in a media industry dominated by giants.
The new company will be named ViacomCBS Inc, although CBS shareholders will own 61 per cent and Viacom shareholders will own 39 per cent.
The merger will combine the CBS television network, CBS News, Showtime cable networks with MTV Networks, Nickelodeon, Comedy Central and the Paramount movie studios. Together, they will own more than 140,000 TV episodes and 3,600 film titles. Annually, it is estimated to generate about $28 billion in revenue.
It creates a company with roughly a $30 billion market value, which is still small compared with rivals including Netflix Inc, at $136 billion, ABC network owner Walt Disney Co, at $245 billion, and NBC owner Comcast Corp at $193 billion.
The merging companies are controlled by National Amusements Inc, the holding company owned by billionaire Sumner Redstone and his daughter, Shari.
"My father once said 'content is king,' and never has that been more true than today," Shari Redstone said in a statement.
The third attempt at a merger since 2016 is a decisive win for Shari Redstone, whose father built the companies through a series of mergers and then broke them apart 13 years ago.
Previous merger talks had failed because of clashes between executives over divvying up top jobs and the companies' relative valuation.
The recombination comes amid an increasingly competitive media landscape dominated by Disney and Netflix, prompting Redstone to pursue a merger.
Viacom Chief Executive Bob Bakish will be the president and CEO of the combined company. Joe Ianniello, interim CEO of CBS, will be named chairman and CEO of CBS, which will exclude the Showtime cable network and book publisher Simon & Schuster.
Joe Ianniello will report to Bakish. Bob Bakish cannot fire Ianniello unless the ViacomCBS board approves.
Bakish in an interview said that he will compete with Netflix, Disney and AT&T for subscribers and also create and sell TV shows and movies to other companies, an operation that will grow thanks to the new deal.
"This is not a put-your-eggs-in-one-basket story," Bakish said. "They all work together."
ViacomCBS can lure customers with free offerings from a service like PlutoTV, which it bought in January, then convince them to pay for a subscription service in another part of the empire like CBS All Access, Bakish said.
SLIGHT PREMIUM
Viacom shareholders will receive 0.59625 CBS shares for each share they own, representing a slight premium to Viacom's closing price on Monday.
The companies said they expected about $500 million in annual cost savings.
The new board of directors will consist of 13 members. Six will come from independent members from CBS, four independent members from Viacom, Bakish, and two National Amusements members. Shari Redstone will be appointed the chairman.
Shares of Viacom rose 2.4 per cent to $29.21 and shares of CBS rose 1.4 per cent to $48.70 after the merger was announced.
Centerview Partners LLC and Lazard Freres & Co served as financial advisers to the CBS board's special committee. Paul, Weiss, Rifkind, Wharton & Garrison LLP served as the special committee's legal counsel.
LionTree Advisors LLC and Morgan Stanley & Co served as financial advisers and Cravath, Swaine & Moore LLP as legal counsel to the special committee to the Viacom board.
Viacom was advised by Shearman & Sterling LLP. National Amusements was advised by Evercore as its financial adviser and by Cleary Gottlieb Steen & Hamilton LLP as its legal counsel.
###
From CNBC:
ViacomCBS CEO: We have the scale to take on Disney and Netflix
KEY POINTS
- ViacomCBS chief Bob Bakish says the newly formed company’s vast content library should help it fight off rivals in the TV streaming wars.
- Bakish says the library includes 140,000 TV episodes, 36,000 films and 750 series.
- “There’s no question the companies are clearly stronger together than they are independently,” he tells CNBC.
Bob Bakish, the head of a newly combined CBS and Viacom, said the media company has the scale to take on rivals.
In an interview with CNBC’s Andrew Ross Sorkin, Bakish cited its content library, which includes 140,000 TV episodes, 36,000 films and 750 series, as enough ammo to fight the likes of Netflix, Disney, Comcast and others entering the TV streaming wars.
The comments came a day after CBS and Viacom announced an agreement to merge, reuniting the two companies after 13 years apart and several attempts at a deal since 2016. The new company will be called ViacomCBS and Bakish will lead the combined entity.
“It really has almost unmatched scale on the content side,” Bakish said. “We clearly have scale in content. There’s no question the companies are clearly stronger together than they are independently.”
Still, Viacom and CBS, which are valued at $11.8 billion and $18.2 billion, respectively, are dwarfed by Disney, which is worth $246.8 billion, and Netflix, which has a market cap of $136.7 billion.
With the merger announced, investors’ attention has turned to whether or not ViacomCBS will pursue additional deals in an effort to beef up its competitive edge. Bakish said M&A could serve as a “vehicle” to increase its scale, adding that the company is looking at its options.
“It’s early days, we’re just getting started,” Bakish said.
”[CBS and Viacom] came apart at a different time in media, with different circumstances around it,” Bakish said. “Putting them together today is the right move.”
The acquisition, which is expected to close by year’s end, creates a combined company with more than $28 billion in revenue.
CBS stands to gain the movie studio Paramount Pictures, cable networks including Comedy Central, MTV, Nickelodeon and BET, as well as the streaming service Pluto TV and South Park Studios as a result of the merger. CBS owns the legacy broadcast network, in addition to other cable and media properties.
Once the merger is complete, it’s possible that the combined companies may look to acquire another company, such as Discovery, Starz or Sony. Lions Gate, the parent company of Starz, has previously held talks with CBS about offloading the premium entertainment network.
###
From Reuters:
CBS, Viacom reunite with plans for bigger role in streaming TV wars
(Reuters) - CBS Corp (CBS.N) and Viacom Inc (VIAB.O) have reached a deal to reunite media mogul Sumner Redstone’s U.S. entertainment empire, betting that a larger company will be able to compete and partner better in a media industry dominated by giants.
The new company will be named ViacomCBS Inc, although CBS shareholders will own 61% and Viacom shareholders will own 39%.
The merger will combine the CBS television network, CBS News, Showtime cable networks with MTV Networks, Nickelodeon, Comedy Central and the Paramount movie studios. Together, they will own more than 140,000 TV episodes and 3,600 film titles. Annually, it is estimated to generate about $28 billion in revenue.
It creates a company with roughly a $30 billion market value, which is still small compared with rivals including Netflix Inc (NFLX.O), at $136 billion, ABC network owner Walt Disney Co (DIS.N), at $245 billion, and NBC owner Comcast Corp (CMCSA.O) at $193 billion.
The merging companies are controlled by National Amusements Inc, the holding company owned by billionaire Sumner Redstone and his daughter, Shari.
“My father once said ‘content is king,’ and never has that been more true than today,” Shari Redstone said in a statement.
The third attempt at a merger since 2016 is a decisive win for Shari Redstone, whose father built the companies through a series of mergers and then broke them apart 13 years ago.
Previous merger talks had failed because of clashes between executives over divvying up top jobs and the companies’ relative valuation.
The recombination comes amid an increasingly competitive media landscape dominated by Disney and Netflix, prompting Redstone to pursue a merger.
Viacom Chief Executive Bob Bakish will be the president and CEO of the combined company. Joe Ianniello, interim CEO of CBS, will be named chairman and CEO of CBS, which will exclude the Showtime cable network and book publisher Simon & Schuster.
Ianniello will report to Bakish. Bakish cannot fire Ianniello unless the ViacomCBS board approves.
Bakish in an interview said that he will compete with Netflix, Disney and AT&T for subscribers and also create and sell TV shows and movies to other companies, an operation that will grow thanks to the new deal.
“This is not a put-your-eggs-in-one-basket story,” Bakish said. “They all work together.”
ViacomCBS can lure customers with free offerings from a service like PlutoTV, which it bought in January, then convince them to pay for a subscription service in another part of the empire like CBS All Access, Bakish said.
SLIGHT PREMIUM
Viacom shareholders will receive 0.59625 CBS shares for each share they own, representing a slight premium to Viacom’s closing price on Monday.
The companies said they expected about $500 million in annual cost savings.
The new board of directors will consist of 13 members. Six will come from independent members from CBS, four independent members from Viacom, Bakish, and two National Amusements members. Shari Redstone will be appointed the chairman.
Shares of Viacom rose 2.4% to $29.21 and shares of CBS rose 1.4% to $48.70 after the merger was announced.
Centerview Partners LLC and Lazard Frères & Co served as financial advisers to the CBS board’s special committee. Paul, Weiss, Rifkind, Wharton & Garrison LLP served as the special committee’s legal counsel.
LionTree Advisors LLC and Morgan Stanley & Co served as financial advisers and Cravath, Swaine & Moore LLP as legal counsel to the special committee to the Viacom board.
Viacom was advised by Shearman & Sterling LLP. National Amusements was advised by Evercore as its financial adviser and by Cleary Gottlieb Steen & Hamilton LLP as its legal counsel.
###
From the Los Angeles Times:
Her father once dismissed her as a lightweight. Now Shari Redstone will run the show at ViacomCBS
Just a few years ago, Shari Redstone was on the outs of her family’s far-flung media empire. Her father, Sumner Redstone, once dismissed her publicly as a lightweight who contributed little to the business. Instead, he surrounded himself with younger girlfriends and business cronies.
Tensions were so high that he offered her a $1-billion buyout, and she fumed to her son in 2015: “Your grandfather says I will be chair over his dead body.”
But on Tuesday the boards of CBS and Viacom agreed to reunite the two Redstone-controlled companies that were torn apart 13 years ago. And they announced that Shari Redstone would become chairwoman of the new entity, ViacomCBS Inc., joining a small number of women overseeing a major U.S. company.
Under the nearly $12-billion deal, CBS will absorb the smaller Viacom, which owns such brands as MTV, Nickelodeon, Comedy Central and Paramount Pictures.
The merger agreement is a triumph for Redstone, who has overseen the family’s controlling stakes in the two companies since her father’s declining health forced him to relinquish control. She pushed for the union, believing the two companies would be stronger together during a turbulent time. The entertainment industry is facing intense pressure from technology behemoths Walt Disney Co., Netflix Inc., Amazon.com Inc. and Google, which introduced popular alternatives to traditional television. The changing economics have created a sense of urgency among major Hollywood studios to fortify themselves by bulking up.
“I am really excited to see these two great companies come together so that they can realize the incredible power of their combined assets,” Redstone said in a statement Tuesday. “We will establish a world-class, multi-platform media organization that is well-positioned for growth in a rapidly transforming industry.”
In the last three years, she has proved herself as a worthy successor to her 96-year-old father, known for his stubborn streak and ability to outlast opponents. Since reentering her father’s life in late 2015, Redstone has vanquished more than a dozen men whom her father put in power. She halted a plan to sell the storied Melrose Avenue movie studio, Paramount Pictures, and now she has corrected what she long considered a mistake — her father’s separation of CBS and Viacom in 2006.
“Shari has definitely proven herself as an effective strategist, someone who is willing to go to whatever lengths she needs to get something done,” said Jordan Matthews, an entertainment attorney with Weinberg Gonser in Los Angeles. “People underestimated her, but she’s proven that she’s obtained a lot of her father’s characteristics.”
The deal is subject to regulatory approvals, but the new company is already taking shape. Redstone’s handpicked lieutenant, Bob Bakish, will oversee the new ViacomCBS as chief executive. Their strong working relationship ensures that Redstone no longer will be the subject of boardroom resistance. Instead, she will be integrally involved in steering the ship as it tries to compete with much larger media and technology companies.
Redstone, as board chair, joins an elite group of women. Only 7% of the largest U.S. companies in Standard & Poor’s top index have a woman as a board chair, according to Fenwick & West, a Mountain View, Calif., law firm. In an additional 14% of those S&P 100 firms, a woman was lead director — another key board post.
“Less than a quarter of the S&P 100 companies have a woman as their chair or a lead director, and that puts Shari in a notable position,” said Dawn Belt, a partner and coauthor of Fenwick & West’s Gender Diversity Study. “It’s awesome. We need more women in leadership positions.”
The Redstone family investment firm, National Amusements Inc., controls nearly 80% of CBS’ and Viacom’s voting shares. Over the years, Shari Redstone would tell her tough-as-nails father that she possessed 80% of his brains, 90% of his passion and 100% of his obsessive personality.
But her path to power, like most things involving the Redstone family, was contentious.
It wasn’t until the elder Redstone’s health deteriorated that she was able squeeze back into her father’s orbit. Earlier this decade, two women had ensconced themselves in Sumner Redstone’s life and he lavished them with gifts valued at $150 million. But by the summer of 2015, those relations had frayed. The elderly mogul was reeling from one of the women’s betrayal and prone to crying spells. That girlfriend, Sydney Holland, left in September 2015. A month later, Sumner Redstone had his other former companion, Manuela Herzer, escorted from his Beverly Park mansion. Herzer sued, claiming Redstone had lost his mental capacity.
Herzer’s lawsuit plunged National Amusements and Viacom into turmoil. Shari Redstone, who divides her time between Boston, Connecticut and Los Angeles, spent weeks assisting her father at his home and successfully defending the case against Herzer. (A judge eventually ruled in favor of Redstone.)
But it was former Viacom Chief Executive Philippe Dauman’s plan to sell Paramount Pictures that bonded father and daughter.
Sumner Redstone built his empire from a small regional chain of movie theaters. After Viacom purchased Paramount Pictures in 1994, Sumner Redstone hailed the moment as his arrival in the media big leagues. So when Dauman proposed selling Paramount to a Chinese company in early 2016, Shari Redstone dug in for a fight.
Within a few months, she and Sumner Redstone removed Dauman and his ally from the family’s investment firm, which provoked a high-stakes lawsuit. The Redstones prevailed, and Dauman, who presided over Viacom as its value plummeted, resigned.
“There was almost willful destruction of MTV, VH1 and all of those iconic brands,” said Jeffrey Sonnenfeld, a professor at Yale School of Management. “Even if you wanted to sabotage the company, it would be hard to do more damage than [previous management] did.”
Shari Redstone tried to nudge CBS to merge with Viacom, but CBS’ then-leader, Leslie Moonves, was worried that Viacom, which was grappling with a falling stock price and an exodus of viewers, would become a drag on CBS. In late 2016, Bakish was named Viacom’s CEO and he began working to rebuild the company.
He invested in programming and made acquisitions to broaden Viacom’s reach. He overhauled the management of the moribund Paramount and tossed out senior TV executives. In its most recent fiscal quarter, Viacom hit a milestone when it reported that domestic advertising had increased for the first time in five years. The company also boasts this summer’s top cable series, “Yellowstone.”
Shari Redstone “could have taken her wealth and gone on her merry way, investing in Facebook or elsewhere, without worrying about the destruction of these iconic enterprises,” Sonnenfeld said. “But she was here, trying to fix these media platforms.”
In early 2018, Redstone again tried to get CBS to entertain the Viacom merger. Talks were ongoing but collapsed when CBS’ management feared that she was trying to remove Moonves’ allies on the board. CBS’ independent board members filed suit to strip the Redstones of their voting control.
But within a few months, the court fight in Delaware was eclipsed by a scandal engulfing Moonves, who had run CBS since the 2006 split. Investigative reporter Ronan Farrow revealed allegations of several women who accused Moonves of sexual misconduct in the 1980s and 1990s. (Moonves has denied the allegations.) Within six weeks, Moonves resigned.
Behind the scenes, Redstone was instrumental in refreshing the CBS board by bouncing veterans who were friends of her father’s. But some on CBS’ board were wary. As a condition of the September 2018 settlement, she agreed to not try to orchestrate a merger with Viacom for at least two years.
Meanwhile, the media industry was rapidly consolidating. AT&T Inc. acquired Time Warner Inc., owner of HBO, CNN, TBS and Warner Bros. Disney in March completed its $71.3-billion takeover of much of Rupert Murdoch’s 21st Century Fox. This spring, independent members of CBS’ and Viacom’s boards began discussing a merger. Talks spanned months and culminated Tuesday with the all-stock deal that the two companies believe will be completed by the end of the year.
“Shari has been pretty adamant about this combination,” said Daniel A. Lyons, a professor at Boston College Law School. Tuesday’s agreement, he said, “vindicates the strategy that she’s had.”
Now, the challenge will be integrating two companies that have been separate for more than a decade. Bakish and CBS’ acting chief, Joseph Ianniello, must fuse together two different cultures and navigate the shift to streaming services.
Media observers wonder whether Redstone will position ViacomCBS Inc. for a sale — or if she will tighten her grip.
“It might depend on where the stock goes over the next year or two,” Matthews said. “But she’s finally out from under her father’s shadow, and I think she’s driven to make a name for herself and prove what else she can do.”
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From Thomson Reuters Foundation:
ViacomCBS is just the beginning of Shari Redstone's media deals
NEW YORK, Aug 13 (Reuters) - More than two months before CBS Corp and Viacom Inc succeeded at a third attempt to recombine, controlling shareholder Shari Redstone had already decided the new company needed to get bigger.
"We would want to look at something after that to ... develop more scale as we move forward," Redstone said at The Information's Women in Tech, Media and Finance conference in June.
To the audience of executives in the Times Square high rise overlooking the storied Paramount building, it was clear that her ambitions went well beyond the hard-won reunion of the two companies her father, Sumner Redstone, put together and then pulled apart 13 years ago during a very different era in media.
She has considered a variety of options that include a sale to a larger company or acquisitions that fall into two categories represented by Sony Entertainment and Discovery, people familiar with her thinking said.
Even with the combined portfolio of companies that include the CBS television network, CBS News, Showtime cable network and book publisher Simon & Schuster with MTV, Paramount studios and Nickelodeon, the new company, which will be called ViacomCBS Inc, will lack the firepower required to take on the likes of Walt Disney Co and Netflix Inc, Redstone believed.
By next year, the battle waged by big tech and the last of the remaining media giants will get bloodier when Disney, AT&T Inc and Comcast's NBCUniversal join Netflix, Amazon.com Inc and Apple Inc in the streaming video war for consumer wallets.
Taken together CBS and Viacom's market capitalization of about $30 billion is dwarfed by Disney's $247 billion and Netflix's $137 billion.
Viacom, CBS, Redstone's National Amusements, Sony and Discovery declined to comment.
A purchase of Discovery Inc would give it a vast network of popular cable networks and libraries of unscripted shows including the Discovery Channel, Animal Planet, the Food Network and HGTV. It would also give ViacomCBS Inc greater exposure in sports and international markets. But a deal would come at a time when consumers are abandoning cable and satellite TV subscriptions in favor of streaming services like Netflix.
A pursuit of Sony Corp's entertainment divisions would send the message that it will play a bigger role in the streaming video wars in two ways.
Unlike Disney or AT&T's WarnerMedia, ViacomCBS plans to continue to play a hybrid role, both as a direct rival for subscribers and viewers to its free and paid streaming services as well as a producer of movies and shows for companies like Netflix and Amazon. Sony would provide additional content creation resources and a library of content that include "Spider-Man," "Jumanji," "Hotel Transylvania" and Quentin Tarantino's "Once Upon a Time in Hollywood."
Redstone has not held talks with either companies and neither have expressed interest in a sale or merger for now.
At the moment, Sony has shown little interest in divesting assets despite flirting with the idea over the three decades it has owned the Hollywood studios.
Although activist shareholder Daniel Loeb urged Sony to spin off assets in the spring, Sony reaffirmed its commitment to its entertainment division. Its studio has flourished under chief Tony Vinciquerra, and Sony has said it is in the process of once again trying to get its PlayStation, music and movies divisions to work more closely together.
Discovery, whose Chief Executive David Zaslav was briefly mentioned as a potential candidate to run CBS, is also busy building a non-scripted entertainment, natural history and "factual programming" empire. It most recently restructuring a deal with the BBC that will see it launch a global subscription video-on-demand service.
The new company could also rekindle its talks to buy Lions Gate Entertainment Corp's Starz cable network. CBS made an informal offer to buy the network for about $5 billion and Lions Gate wanted $5.5 billion.
It is not immediately clear what the appetite for Starz will be after the merger when current Viacom CEO Bob Bakish will take over, one source familiar with the talks said. Those talks were driven by CBS interim CEO Joe Ianniello, who is expected to report to Bakish, his new boss.
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From AdNews Australia:
CBS and Viacom merge to create new media giant
CBS and Viacom have entered into a definitive agreement to combine in an all-stock merger, as the media giants look to take on the likes of Disney, Netflix and Amazon.
The international deal will create a combined company with more than $28 billion in revenue, with a library of 140,000+ premium
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TV episodes and 3,600+ film titles, as well as production capabilities across five continents.
The combined company will be a scale player globally, with leadership positions in markets across the U.S., Europe, Latin America and Asia.
In addition, the combined company will possess a portfolio of fast-growing direct-to-consumer platforms, including both subscription and ad-supported offerings.
It will also include a major Hollywood film studio, Paramount Pictures, which has been a producer and global distributor of filmed entertainment for more than a century and continues to be a global box office driver.
The combined company will possess a portfolio of consumer brands, including CBS, Showtime, Nickelodeon, MTV, BET, Comedy Central and Paramount Network.
In a statement regarding the merger, Viacom and CBS, which owns Network Ten in Australia, stated that it will continue to operate its international networks accordingly.
Bob Bakish, president and chief executive officer of Viacom, will take over leadership of the combined company.
“Today marks an important day for CBS and Viacom, as 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 says.
"Our unique ability to produce premium and popular content for global audiences at scale – for our own platforms and for our partners around the world – will enable us to maximize our business for today, while positioning us to lead for years to come.
"As we look to the future, I couldn’t be more excited about the opportunities ahead for the combined company and all of our stakeholders – including consumers, the creative community, commercial partners, employees and, of course, our shareholders.”
The deal is expected to accelerate CBS and Viacom’s ability to deliver an "array of compelling content" to important and diverse audiences across both traditional and emerging platforms around the world.
The two companies also revealed a three point strategic plan behind the merger:
1 - Accelerate direct-to-consumer strategy. Together, the combined company will be positioned to accelerate and expand its direct-to-consumer strategy through its proven and diverse portfolio of both subscription and adsupported offerings. These include CBS All Access and Showtime.
2 - Enhance distribution and advertising opportunities. The breadth and depth of the combined company’s reach across both traditional and new platforms – including 22% of U.S. TV viewership – will drive important new distribution and advertising opportunities.
3 - Create a leading producer and licensor of premium content to third-party platforms globally. As one of the biggest premium content providers in the world, the combined company is positioned to deliver content to a diverse global customer base that includes MVPDs, broadcast and cable networks, subscription and adsupported streaming services, mobile providers and social platforms.
Joe Ianniello, president and acting CEO of CBS, will become chairman and CEO of CBS. Ianniello will oversee all CBS-branded assets in his new role.
“This merger brings an exciting new set of opportunities to both companies. At CBS, we have outstanding momentum right now – creatively and operationally – and Viacom’s portfolio will help accelerate that progress," Ianniello says.
"I look forward to all we will do together as we build on our ongoing success. And personally, I am pleased to remain focused on CBS’s top priority – continuing our transformation into a global, multiplatform, premium content company.”
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From The Hollywood Reporter:
Bob Bakish Addresses Viacom Staff During Town Hall
The Viacom boss, who will serve as president and CEO of the merged ViacomCBS, spoke to staff in a "Bob Live" question-and-answer session.
There will be change but not as much as some staffers may have expected, Viacom CEO Bob Bakish told staff in a town hall on Wednesday, a day following the unveiling of the mega-deal to recombine with CBS Corp.
"Having this IP under one umbrella will give us a huge advantage," he said during Wednesday's address and Q&A with employees of Paramount Pictures, Nickelodeon and MTV, among other Viacom divisions.
Bakish, designated as president and CEO of the combined ViacomCBS, spoke during what's come to be know as a "Bob Live" session he holds every quarter, usually around the time of earnings reports. Today's session was moved up from September to give staff a chance to ask questions about the CBS deal, whether in the room or via online submission.
He said there were no imminent leadership changes, pending closure of the deal. "We will hear more leadership announcements before the end of the year," he said. Bakish spoke from an amphitheater at Viacom's office in New York's Times Square, starting at 1 p.m. local time.
Viacom and CBS Corp. executives on Tuesday promised the combination would yield $500 million in cost savings, but didn't detail where they would come from.
Early Wednesday morning, Bakish went on CNBC to discuss the mega-deal. Asked how the cultures would mesh, he said: "There is a tremendous opportunity to create a unified ViacomCBS. And I think there is a lot more in common in the cultures than people give credit for."
He added about his management approach: "When I took the acting CEO job at the end of '16 for Viacom, this company was totally siloed. It had a lot of issues. Paramount was an island. ... The networks even in the U.S. weren’t that collaborative in terms of running together. But today we run one Viacom."
He added in the interview, "We have multiple business units that are building off of the brands, whether it’s Viacom Digital Studios, obviously, domestic networks, international networks and Paramount. And that was the result of a vision, a management team and then executing. It’s the same kind of thing we have to do at ViacomCBS."
Bakish also lauded CBS Corp. acting CEO who will become chairman and CEO of ViacomCBS, telling CNBC: "I have known Joe Ianniello for 20 years. I have tremendous respect for what he's done at CBS. He’s clearly a world-class executive."
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From scoopsquare24:
Read Memos From Bob Bakish And Joe Ianniello – scoopsquare24
Cementing the long-awaited merger of CBS and Viacom, the heads of every firm, Bob Bakish at Viacom and Joe Ianniello at CBS, conveyed the information to their troops with out sugarcoating the “challenges” of uniting two giant organizations.
Ending years of on-again, off-again discussions, the businesses stated Tuesday they’re formally coming collectively in a brand new entity to be often called ViacomCBS. Regulators will nonetheless must bless the mix, which is able to lead to an organization with a market worth of about $30 billion. Nonetheless additional M&A might be undertaken to make certain the corporate can hold tempo with media giants a number of occasions bigger, to say nothing of deep-pocketed tech companies.
Each Bakish and Ianniello joined the corporate within the 1990s and labored there when it was below a single roof (from 2000 to 2006), however the media panorama has modified considerably within the years since.
Associated Story
CBS And Viacom Finally Re-Tie The Knot, Merging After 13 Years As Separate Companies
For CBS, the altering of the guard after 13 years as a solo enterprise, is a big milestone in a 92-year company saga. Viacom’s roots are extra tangled, although the corporate was integrated below its present identify in 1970. The 1980s was a key decade for Viacom, which purchased MTV and Nickelodeon in 1984 after which noticed Sumner Redstone enter the scene through his exhibition chain Nationwide Amusements in 1986.
Right here’s Bakish’s memo as we speak:
Workforce –
I’m writing as we speak to share some huge information. We simply introduced an settlement to merge with CBS, bringing collectively our two nice firms to create a number one world, multiplatform, premium content material powerhouse.
This merger comes with plenty of expectation, however it additionally comes with what I imagine is a uncommon and thrilling alternative. Collectively, we now have the chance to be one of many few firms positioned to form the way forward for the leisure business.
With this settlement, we carry collectively probably the most storied studio in Hollywood, a portfolio of manufacturers which have formed tradition for almost 4 a long time, a broadcast powerhouse rightfully referred to as “The Tiffany Community,” a significant drive in client publishing with Simon & Schuster, and Showtime, a premium model that persistently pushes the boundaries of storytelling. Between us, we additionally boast probably the most modern, diversified collections of digital property within the business. Make no mistake, collectively we aren’t simply larger – we’re a lot, significantly better.
Our mixed firm – which shall be referred to as ViacomCBS – may have a library of content material with unbelievable breadth and depth, and a strengthened functionality to provide premium and fashionable content material at scale. We’ll have larger attain, strengthening our place with promoting and distribution companions. We may have an prolonged portfolio of direct-to-consumer merchandise — each ad-supported and subscription-based — that can speed up our progress. And we’ll have the ability to construct on our management positions within the US, UK, Australia, Argentina and India for continued world growth.
Very importantly to me, CBS and Viacom are additionally a terrific match. The CBS crew is extremely gifted, with distinct experience that has propelled the corporate’s continued management in broadcast, D2C and past. And, each of our firms share a ardour for creating premium content material and a dedication to innovating via a quickly shifting media panorama.
I’m honored to say that I shall be main the mixed firm as President and CEO. Christa D’Alimonte will function EVP, Basic Counsel and Secretary. Christina Spade, who’s at the moment EVP and CFO of CBS, will function EVP and CFO of the mixed firm. Joe Ianniello – at the moment President and Appearing CEO of CBS – will function Chairman and CEO of CBS, overseeing the CBS-branded property.
Combining our firms shall be a joint effort. Over time, we count on there shall be alternatives to carry our groups along with our friends at CBS, so we are able to start figuring out methods to work collectively and be taught from one another.
In brief, I’m very excited to start working with CBS. Collectively, we are able to higher maximize our enterprise as we speak, whereas making certain we lead the business tomorrow.
This can be a huge step ahead for all of us, and I’m so grateful for all you’ve executed to get us right here. Regardless of modifications in our firm and the business — in addition to the continued hypothesis of a possible merger — you’ve targeted. You’ve executed. And, you’ve delivered, which makes us a a lot stronger firm than we had been only a few years in the past. I’m hoping you’ll be able to keep comparable focus and dedication within the months forward as we work to shut the transaction.
One change we already know will occur is that Wade Davis will depart in reference to the closing of the transaction, as we’ve decided there isn’t a senior working position on the company degree of the merged firm that may be according to the complete breadth of his expertise, experience and the scope of his present position at Viacom.
Wade has been one among Viacom’s most vocal and passionate champions, taking part in a crucial position for the corporate in serving to to develop and efficiently execute our technique to evolve Viacom for the longer term. Along with managing our world monetary capabilities, company growth, investor relations, knowledge science and know-how providers, over the previous two years he has spearheaded essential strategic progress initiatives, together with most not too long ago the creation of Superior Advertising Options, which was the engine that retuned us to Home Advert Gross sales progress, in addition to the acquisition, integration and administration of Pluto TV, which helped us set up a management place within the DTC market. We’re so grateful for his many contributions, and that he’ll be with us via the closing of the deal.
All through the method forward, I promise to be as accessible and clear as I can, beginning with a Bob Reside tomorrow, the place I’ll provide you with an summary of the merger and reply any questions you’ll have.
I can’t wait to talk with you then. Within the meantime, please take a look at the press launch under for additional particulars, and thanks once more for all of your onerous work in getting us to this crucial milestone.
Greatest,
Bob
Right here’s Ianniello’s memo:
Pricey Colleagues –
CBS is getting into a brand new period as we speak, saying a merger with Viacom that bolsters our premium content material portfolio and positions us for a fair higher future. As everyone knows, there’s a race to create extra of the very best content material. We’re already leaders on this regard, and as we speak’s information will speed up our world ambitions.
We’re merging at a time when the probabilities for premium content material firms are larger than ever. Viacom owns terrific manufacturers – Paramount, Nickelodeon, BET, MTV, Comedy Central and plenty of others – that can complement ours and supply modern methods to achieve an entire new set of viewers. You possibly can learn extra about the advantages of the deal on this press launch.
Once we finalize the merger, Viacom CEO Bob Bakish will turn out to be the President and CEO of the mixed firm, and I’ll turn out to be the Chairman and CEO of CBS. Bob and I’ll guarantee a easy and regular integration of our two nice firms.
I’m proud that I’ll proceed to steer CBS, accountable for overseeing all of our CBS-branded companies. I really like CBS such as you do, and I’m happy to stay a steward of it together with our nice crew.
The brand new ViacomCBS will embody company illustration from each administration groups, together with our Chief Monetary Officer, Chris Spade, who will turn out to be ViacomCBS’ CFO.
Collectively, we’ll construct upon our success in Leisure, Information and Sports activities with the #1 tv community, a prolific studio that produces increasingly more hit programming for shops throughout the business, an interactive division that operates CBS All Entry and is a top-10 digital property within the U.S., a syndication arm that has eight of the highest 10 first-run exhibits on tv, and a neighborhood media enterprise that has 28 tv stations within the nation’s main markets. As for our esteemed colleagues at Simon & Schuster and Showtime, your divisions will report back to Bob when the deal closes, working below the impressed management of Carolyn Reidy and David Nevins – who can even proceed to work with me overseeing leisure programming for CBS, CBS TV Studios and CBS All Entry.
CBS was based on the precept of nice content material. That is one thing that won’t change. In truth, our announcement as we speak is structured partly to make sure that our custom of excellence will stay an integral a part of our future. And so in my position I’ll be “conserving my Eye on the Eye”…working with you to make sure that the wealthy heritage of CBS stays central to all the things we do…and that CBS continues to thrive because it has magnificently for greater than 90 years.
After all, our greatest and strongest asset is our folks, and we’ll proceed to prioritize investing in you. We’ve achieved a lot on that entrance not too long ago, and I guarantee you that our ongoing dedication to a optimistic, various and inclusive office will stay a key precedence.
It’s essential to notice that the overwhelming majority of you’ll proceed to excel in your present roles. And whereas all of us will expertise some change, together with new challenges and alternatives, I would like you to know that each one among you is a vital element of our success, and we worth your contributions day by day.
It’s additionally essential to keep in mind that the method of mixing our two firms received’t occur in a single day, and the closing of this merger is probably going a number of months away. I do know that lots of you’ll have questions, and they are going to be addressed within the upcoming weeks and months.
Within the meantime, it’s best to all believe that as we speak’s announcement will put us in a decidedly higher aggressive place to reach the years forward. As all the time, you’ve gotten my appreciation and respect for the creativity, dedication and loyalty that you just carry to your job day by day. You’re CBS.
Joe
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From FierceVideo:
How ViacomCBS impacts CBS All Access, Showtime OTT and Pluto TV
The finally completed CBS-Viacom remerger, creating ViacomCBS, listed direct-to-consumer streaming video as a top priority for future growth. This means CBS All Access, Showtime OTT and Pluto TV will have to step up.
These three services are not the only DTC video services within the combined company’s portfolio; there’s also niche products such as CBSN, ET Live, Noggin and the upcoming BET Plus. But they are key pieces within ViacomCBS’s streaming strategy.
When it reported earnings last week, CBS didn’t update subscriber totals for All Access and Showtime OTT but did say the services are still on track to have a combined 25 million subscribers by 2022, and that they helped deliver a 13% increase in affiliate and subscription fee revenue. Viacom, which also reported last week, said that Pluto TV grew to 18 million monthly active users at the end of July, up from 12 million at the start of the year.
During a conference call Tuesday with investors, ViacomCBS CEO Bob Bakish said the combined company’s mix of subscription and ad-supported services will enable portfolio cross-selling while providing a free consumer entry point that the company can upsell subscriptions from and a place to catch consumers who take churn out of subscription services.
Specifically, Bakish and CBS CEO Joe Ianniello addressed how Viacom and CBS content will begin to flow between the company’s subscription and ad-based services.
“There is nothing at all preventing us from moving forward in terms of beginning to unlock that opportunity in the very near future,” said Bakish. “Obviously it’s something that we will build on over time, but there’s some low-hanging fruit there we will seek to pick quite soon.”
Given CBS’s recent announcement that it’s adding kids programming to All Access, it would make a lot of sense to further monetize Viacom’s deep library of Nickelodeon and Nick Jr. programming on that platform. Ianniello said that the influx of Viacom kids programming to All Access won’t result in a price increase since the company wants to continue to drive subscriber growth by maintaining competitive pricing.
In terms of synergies presented by the merger for CBS’s and Viacom’s existing DTC businesses, Bakish said that synergies are not the focus. He instead said the combination of ViacomCBS’s SVOD and AVOD services (and the co-marketing opportunities that presents) are a growth opportunity for topline revenues and subscriber totals.
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From ToyNews:
KidsKnowBest explores: What does the ViacomCBS merger mean for kids’ entertainment?
The merger – or reunification – of CBS and Viacom makes perfect sense on paper. The deal brings brands such as Nickelodeon, Paramount TV, MTV, Comedy Central, CBS Network, and Showtime all under one roof, boasting a combined portfolio of over 140,000 TV episodes and 3,600 movies, according to ABC News. It will also allow the combined business to invest in more new content.
Yet ViacomCBS will still remain relatively small compared to the likes of Disney and Netflix, as all the media corporations continue to jostle for position in the battle for eyeballs.
Personally, I’m not hugely confident about the merger, and – like many others, I’m sure – I’ve also become slightly confused by all the ‘relationships’ in the recent media mergers.
Nickelodeon and Nick Jr. are better than anyone else at creating blockbusters from linear TV shows. This gives them access to CBS’s own younger skewing brands, which can be exploited. Viacom sees Nickelodeon and Nick Jr. as a platform to launch and mature high-quality kids’ content. And I don’t see why this would change. Linear viewing figures may continue to decline, but they are still huge. And our own study shows that Netflix will slowly catch up – as will other streaming platforms.
Perhaps the most interesting and commented on element of the merger is the impact on the Star Trek IP. This is a brand that has a huge adult fan audience and enough story for ViacomCBS to build a very strong kid-focussed show. The merger with Nickelodeon means that, at some stage in the future, it may find a brave new home for kids, family and adult fans.
Content needs an audience to survive. In theory this creates a far larger catalogue and broader demographic appeal for CBC All Access. Which should make it a more compelling subscription offer for families who want deep, broad and quality content in one place. The challenge will be – is it more compelling to what the likes of Netflix and Disney will offer?
In terms of kids’ content, it will be interesting how to see how they leverage kids content on CBS All Access, Viacom’s kid focussed linear channels, and the ad-supported Pluto TV which has over 18 million MAUs (monthly active users) already.
The content CBS All Access is dealing with has really strong multi-generational appeal, featuring Danger Mouse and Inspector Gadget, amongst others. Add this to the Viacom kids’ content from the ‘90s (and there is a really strong emergence of brands that, if executed well, will hit both parents and their kids. At the moment, I don’t see how it all fits together across the multiple platforms, business models and trenches of kids’ content, but if they collect data on which brands across each platform create meaningful audience relationships, they may continue to grow niche and mainstream amongst broader audiences.
So, ultimately, what will the merger mean for the kids’ entertainment space in general?
Viacom and CBS needed more clout in the battle for eyeballs. Whether this is the right relationship or not, they would have found it harder in the new universe of kids’ content when facing all the other mergers. This should make them more competitive by increasing their audience reach across demographics in both ‘channels’ and brands.
But without dodging the question, who knows? The rate of consolidation via mergers and meaningful partnerships makes it challenging to predict what the kids’ entertainment space will look like once all these relationships have operationally matured. Kids’ content being bundled into wider demographic universes is the blockbuster strategy. So finding a place and marrying a brand where IPs can exploit adult fans, parent buyers and children’s desire to super-consume a brand across platforms is interesting. By providing multiple spaces from cinema, retail, ad-funded networks such as Pluto TV and kids curated spaces like CBS All Access or Noggin, it seems sensible to provide a viewing occasion for each type of family and need.
We’ll be watching this space closely…
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From TheWrap:
Bob Bakish to Earn More Than $31 Million as ViacomCBS CEO
Board members also revealed for newly-combined company in SEC filing
Viacom CEO Bob Bakish will earn $31 million as CEO of the newly-combined ViacomCBS, according to an SEC filing Monday.
That would represent a jump of 55% from his 2018 pay. Here’s how it breaks down:
Bakish’s base salary will be $3.1 million, and he’ll be eligible to receive annual grants of equity compensation with an aggregate target value of $16 million. Bakish’s target annual cash bonus under the ViacomCBS’ senior executive short-term incentive plan will be $12.4 million. He will also get a four-year contract extension upon the merger’s closing, with options for a one-year renewal after three years.
The $31.5 million package is less than half of what former CBS CEO Leslie Moonves made in 2017 ($69.1 million), his last full year on the job. Moonves only made $12.6 million in 2018 after forfeiting $34.5 million of his $42.5 million in stock awards as part of his separation agreement last year. He resigned following multiple sexual misconduct accusations in September.
Last week, Viacom and CBS announced their intentions to combine and form a new company called ViacomCBS. The deal puts the CBS broadcast network, Viacom’s stable of cable channels like MTV and Nickelodeon, and the Paramount film and TV studio under one roof. The transaction is subject to regulatory approvals and other customary closing conditions. It is expected to close by the end of this year.
The filing also stated that Joe Ianniello, who will become Chairman and CEO of CBS Networks and extended his contract through 2021, has a stipulation that he can only be fired or have his duties modified by the ViacomCBS board of directors, even though he reports to Bakish. The filing also clarified that Ianiello’s new contract is a 15-month fixed extension that kicks in after the merger’s closing.
While Ianniello compensation will remain the same, he will get a payout of nearly $70 million when the deal closes. He had a stipulation in his prior contract when he became acting CEO of CBS that entitled him to that amount if he wasn’t named CEO of the combined company following any potential merger.
ViacomCBS also revealed the board members under Shari Redstone, who will serve as chairman of the board:
Candace K. Beinecke, Barbara M. Byrne, Brian Goldner, Linda M. Griego, Susan Schuman and Frederick O. Terrell for CBS. For Viacom: Judith McHale, Ronald Nelson, Charles E. Phillips, Jr. and Nicole Seligman. Redstone attorney Robert Klieger is also on the board representing the interests National Amusements Inc, the Redstone-owned controlling stakeholder of both companies.
Strauss Zelnick, who took over as chairman of CBS’ board, will not be part of the ViacomCBS board.
The filing also stated that the merger agreement can be terminated by either company if it’s not closed by May 13, 2020. CBS would be on the hook for $560 million if it called off the merger, while Viacom would have to pay $373 million if it decided to cancel the deal.
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From MarketWatch:
Merger will be lucrative for Viacom and CBS chief executives
New CEO of combined company to get 55% pay bump; outgoing CBS CEO to get $70 million payout
The merger of Viacom Inc. and CBS Corp. will be lucrative for the top executives of both companies.
Viacom Chief Executive Bob Bakish, who will become president and CEO of the combined company, ViacomCBS, has signed a new contract ending four years after the deal closes. The contract lists salary, bonuses and other incentives worth about $31 million a year, roughly 55% higher than Bakish’s total compensation in the most recent fiscal year, the company said in a securities filing.
Acting CBS Chief Executive Joe Ianniello, who will be chairman and CEO of CBS at ViacomCBS, will receive a payout of about $70 million when the deal closes. That payment resulted from a provision in his old contract at CBS that entitled him to a lump sum if he wasn’t named CEO of the combined company in the event of a merger.
Viacom last week struck a deal to reunite the empire of media mogul Sumner Redstone, creating a conglomerate with a valuation of $27 billion. The deal will combine Viacom’s popular cable channels, including Nickelodeon and Comedy Central, as well as its Paramount movie and TV studio, with the CBS broadcast network and premium cable channel Showtime.
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From The Hollywood Reporter:
ViacomCBS CEO Bob Bakish's Pay to Rise to $31M After Merger
An SEC filing also discloses steep termination fees if Viacom or CBS calls off the deal.
Viacom CEO Bob Bakish will see his compensation rise by about 50 percent once he assumes control of a combined ViacomCBS.
According to a merger filing with the Securities and Exchange Commission on Monday, Bakish will be eligible for $31.5 million in compensation, split between a $3.1 million salary, annual equity grants valued at $16 million and an an annual bonus valued at $12.4 million.
The final compensation will fluctuate based on performance and stock price. Bakish will also receive a one-time RSU grant valued at $5 million. (Bakish's 2018 compensation was $20.3 million.)
In addition, CBS has signed CEO Joe Ianniello to a new contract covering his role overseeing the CBS assets of the combined company. The contract extends his role as acting CEO of CBS through the completion of the merger or February 2020, whichever comes first, though the company has the option to extend his contract on a month by month basis beyond February.
Bakish’s contract will extend for four years from the closing of the deal, and will be subject to one-year extensions. Ianniello, meanwhile, will have a fixed term commencing on the deal's closing date, lasting for 15 months.
Ianniello will also receive a one-time grant of 450,000 RSUs. The company also entered into a new contract with CFO Christina Spade, who will assume the same role with the combined company.
The board of ViacomCBS will include six current CBS board members — Candace K. Beinecke, Barbara M. Byrne, Brian Goldner, Linda M. Griego, Susan Schuman and Frederick O. Terrell — and four current Viacom board members — Judith McHale, Ronald Nelson, Charles E. Phillips, Jr. and Nicole Seligman — as well as Bakish and National Amusements' Robert N. Klieger. Shari Redstone will be non-executive chair of the board.
The agreement also notes the termination fees that each company will need to pay if the deal is unable to be closed. If Viacom terminates the agreement, it will need to pay CBS $373 million, and if CBS terminates the agreement, it will need to pay Viacom $560 million. For comparison, Disney agreed to pay 21st Century Fox $2.5 billion if that merger was blocked.
The merger agreement also includes an "Extraordinary Transactions" clause in a governance agreement signed between the companies and National Amusements. The clause says that the "NAI Entities acknowledge and affirm they are open to exploring expressions of interest by third parties in potential business combinations or other strategic alternatives," and adds that until the second anniversary of the closing, "the NAI Entities hereby agree to give good faith consideration to any business combination transaction or other strategic alternative involving the Surviving Corporation that the Unaffiliated Directors determine may be in the best interests of the Surviving Corporation and its stockholders."
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From Variety:
David Nevins: CBS-Viacom Merger to Create ‘Virtuous Eco-System’ for Content
CBS and Viacom leaders are looking for opportunities to create a “virtuous eco-system” for content that can prosper across the various platforms of the two companies that are set to merge by year’s end. That was the sentiment shared by David Nevins, chief creative officer of CBS and chairman-CEO of Showtime Networks, during a Q&A on Thursday held as part of Bank of America Merrill Lynch’s Media, Communications and Entertainment conference in Beverly Hills.
In the Q&A with veteran analyst Jessica Reif Ehrlich, Nevins pointed to the deal that was afoot even before the merger agreement was reached for CBS to produce a new “Star Trek” animated series for Viacom’s Nickelodeon. Nickelodeon was a better platform to introduce the show than anything in the CBS family. Having more outlets that reach a wider mix of demographics is good for the long-term cultivation of important CBS-Viacom IP such as “Star Trek.”
“What we’re trying to do right now with ‘Star Trek’ is build that brand. We want it to get younger and more relevant to people,” Nevins said. The hope is that sharing resources across the Viacom and CBS properties will “create this virtuous eco-system between all of those platforms,” he said. “If you’re smart about it you can create a lot of value.”
At the same time, ViacomCBS intend to remain active program suppliers to outside buyers. Nevins echoed the comments from Wednesday made by Jim Gianopulos, head of Viacom’s Paramount Pictures, in noting that ViacomCBS will be well-positioned to as a third-party supplier as Disney, NBCUniversal and other major players funnel more of their productions to in-house streaming platforms.
Nevins cited CBS’ decision to produce the series “Diary of a Female President” from “Jane the Virgin” star Gina Rodriguez for the Disney Plus because it was not the right fit for CBS, the CW or Showtime. The “BH90210” reunion series was produced by CBS (which owns the original
“We really believe in serving not only our own eco-system but serving people on the outside,” Nevins said. “There’s a lot of demand and a lot of suppliers pulling back.”
Nevins asserted that one of ViacomCBS’ selling points to the creative community at a time when talent costs are skyrocketing is that CBS shows have a strong track record of off-network success.
“We tend to make money for our partners,” Nevins said. “That backend possibility … becomes an important differentiator in a world where talent goes where they want to go and they want their stuff to matter.”
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From TheWrap:
Why the CBS-Produced Gina Rodriguez POTUS Series ‘Diary of a Female President’ Landed at Disney+ Instead of The CW
“It didn’t feel like we had the perfect platform,” CBS creative chief David Nevins said Thursday
One of the first series that will debut after Disney+ launches on Nov. 12 will come from a rival studio in CBS TV Studios, which is behind the Gina Rodriguez-produced “Diary of a Female President.” But the series could’ve landed with The CW, where Rodriguez called home for five seasons, starring in “Jane the Virgin.”
“We thought about it for The CW,” CBS’ chief creative officer David Nevins said Thursday during the Bank of America Merrill Lynch’s annual media and entertainment conference. “But the lead is a 12-year-old girl. It didn’t feel like we had the perfect platform.”
Written and created by “Crazy Ex-Girlfriend” alum Ilana Peña, the 10-episode story is told through the narration of a 12-year-old Cuban-American girl’s (Tess Romero) diary as she navigates the ups and downs of middle school and her journey to becoming the future president of the United States. “We were going to jam it in for the CW, but it was a little too young,” Nevins continued.
Rodriguez will play the adult version of the POTUS and serve as executive producer alongside Emily Gipson of her production company I Can and I Will. “The Carmichael Show’s” Robin Shorr will serve as showrunner.
The series does not have a premiere date, but will debut within the first year of Disney+, which launches on Nov. 12. “CBS is going to end up having one of the very first shows at Disney+,” Nevins continued.
The decision to let “Diary of a Female President” go to a competing media company is part of CBS and Viacom’s strategy — the two companies finally agreed to merge last month — as a “pure play” content provider. “We believe in the power of [our] brands. If we have something that we feel is going to burnish one of those brands, is really perfect, we’re going to try to make it stay at the home place,” he said. “Occasionally someone is going to make us an offer we cant refuse.”
He said that is exactly what happened with Disney. “They made us a great deal.”
The series was sold to Disney+ in January, eight months before CBS and Viacom announced their intentions to re-couple. Nevins spoke briefly about the merger, which is expected to close at the end of the year. He said that the addition of Viacom’s children’s programming from Nickelodeon and Paramount’s film library fills “two obvious holes” at CBS. He pointed to the upcoming animated “Star Trek” series on Nickelodeon as a great example of how the two companies compliment each other. “We’ve got to get [‘Star Trek’ audience] younger.”
ViacomCBS will have an array of five separate, but smaller, streaming services between CBS All Access, Showtime OTT and BET+, the company is not planning to come out with one, big, comprehensive offering such as Disney+ or WarnerMedia’s upcoming HBO Max.
That gives the company, Nevins argues, the opportunity to sell to any and all comers, even if it’s a rival company. “There’s a lot of hungry mouths to feed. We really believe in serving not only inside our own ecosystem, but serving people outside. There’s a lot of demand.”
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More Nick: Nickelodeon Assembles Writing Team for New Animated 'Star Trek' Series!
Additional sources: KABC-AM, Seeking Alpha.
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