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Reports: CBS and Viacom on verge of merger

The billion-dollar merger would start a series of moves to compete with the likes of media behemoths Netflix, AT&T, and Disney.

 

Kahron Spearman

Streaming

Published Jul 31, 2019   Updated May 20, 2021, 7:37 am CDT

In a case of making the old new again, it appears CBS Corporation and media conglomerate Viacom (which includes MTV, BET, Nickelodeon, Comedy Central, and VH1) are on their way to reuniting, according to CNBC. The multi-billion-dollar merger would arrange combined interests into one holding company, attempting to directly compete with the likes of media behemoths Netflix, AT&T/Time Warner, Comcast, and Disney.

Last month, the consolidation—primarily made possible with the resignation of the Les Moonves, who opposed any merger—was deemed “probably inevitable,” in a report from credit rating giant Moody’s Investor Service analyst Neil Begley.

“A combined CBS-Viacom would have many positive attributes including cost synergies, dramatically improved leverage with distributors for the Viacom networks, and greater scale of content production, diversity, and distribution,” Begley stated. “The potential merger is a sign that major media companies are stepping up their direct-to-consumer efforts to compete with new ‘Big Box’ on-demand subscription TV services for viewers.”

The merger would improve both the much-needed scale and flexibility of the consolidated company, though it would still be only a fraction of the market caps of Disney or Netflix. As a unit, CBS/Viacom could package their combined programming to existing services for better licensing fees and increase advertising revenue. However, a specific strategy hasn’t been expressed by any outlet; it’s assumed that streamlined and better-focused streaming efforts remain at the forefront.

Since 2005, the two companies have been run as separated entities, though in operation under the Redstone family’s National Amusements, Inc. umbrella. Both boards have already been reportedly reshuffled to hasten the merger. Shari Redstone, president of National Amusements, is reportedly pursuing the merger as the commencement of what could be massive growth in short order. Per a source quoted by NBC: “The CBS-Viacom merger is, to her, a starting line, not a finish line.”

More mergers for the new CBS/Viacom company could arise, including notions of enveloping either (or both) Sony Pictures Entertainment (currently valued at approximately $35 billion) and Discovery/Scripps ($14 billion)—though both companies repeatedly claim neither is for sale. These secondary moves would be in the crosshairs, boosting the scale of the new CBS/Viacom group closer into the Disney and Netflix stratosphere.

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H/T CNBC

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*First Published: Jul 31, 2019, 1:17 pm CDT