Originally published: Tuesday, August 13, 2019 at 20:06 BST.
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 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 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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