CBS and Viacom reach agreement after years of deliberations…
After years of discussions, CBS and Viacom finally completed their long-awaited merger.
The two media giants agreed to an all-stock deal that values Viacom at around $12 billion. Current CBS shareholders will own approximately 61% of the combined company, called ViacomCBS. Viacom shareholders will own the remaining 39% of the company.
Viacom CEO Bob Bakish will be the CEO of the combined company. CBS CEO Joe Ianniello has been named chairman of CBS and will control CBS assets after the merger is finalized.
The deal still needs to be approved by regulators, which will result in the formulation of a company with a market value of about $30 billion.
In a memo released on Thursday, Bakish stated, “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.”
ViacomCBS Faces Extreme Competition
While this merger combines two major media companies, the newly formed ViacomCBS still risks being bested by its bigger rivals.
Netflix, for example, has dedicated a large portion of its time and money to creating new original moves and TV series in recent years. Disney has also already released several billion-dollar films this year, with plans to release more hits in the coming months. AT&T is also planning to increase HBO’s content budget.
Media giants like these have massive budgets dedicated to content production. If ViacomCBS wants to be a serious competitor in this industry, it will have to grow quickly to match the production efforts of its rival studios.
Possible Future Acquisitions
For ViacomCBS to grow its production budget and increase its content library, it will need to make additional acquisitions going forward.
CBS held talks earlier this year to acquire Starz from Lions Gate, though the companies never came to an agreement. If ViacomCBS continues to pursue this acquisition, it could lead to synergies between Starz and Showtime, the latter of which is already owned by CBS.
And investor Dan Loeb has been pushing Sony to split the company into two divisions: electronics and entertainment. Though Sony has resisted Loeb so far, Sony Pictures could be a great acquisition for ViacomCBS — if Sony is willing to part with its entertainment division.
While ViacomCBS hasn’t yet announced any plans to buy any other media companies, it will likely be necessary for the newly-formed company to thrive in the competitive media industry.
