Viacom-CBS Merger Done Creating Larger TV Company

ViacomCBS to spend $13B on content annually
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Viacom and CBS announced the completion of their merger, creating ViacomCBS.

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The new company will account for 22% of U.S. TV viewership and invest more than $13 billion in content annually.

“This is a historic moment that brings together two iconic companies to form one of the world’s most important content producers and providers,” said Bob Bakish, president and CEO of ViacomCBS.

“Through the combination of CBS’s and Viacom’s complementary assets, capabilities and talented teams, ViacomCBS will create and deliver premium content for its own platforms and for others, while providing innovative solutions for advertisers and distributors globally,” Bakish said. “I am excited about the opportunity we have to serve our audiences, creative and commercial partners, and employees, while generating significant long-term value for our shareholders.”

Both CBS and Viacom are controlled by the family of Sumner and Shari Redstone. Shari Redstone, chairman of the new company, reportedly pushed for the merger.

Viacom and CBS were combined in 1999 and were split again by Redstone in 2005. At the time, Viacom with its youthful cable networks, was seen as the growth stock, while CBS, a more traditional broadcaster, was seen as the tortoise in the race.

But CBS maintained a high-rated broadcast network and raked in billions in retransmission and reverse compensation revenue. It also jumped into streaming early, with CBS All Access and a Showtime over-the-top product.

Viacom meanwhile struggled as young viewers left its networks in favor of more digital entertainment. Its ratings and ad revenue dropped and, without a broadcaster or big sports franchise, it had little leverage with cable and satellite distributors.

As the TV industry turned to streaming, a wave of mergers took hold in the media business in order to build scale to compete with Netflix and Amazon.

On Viacom’s fiscal fourth-quarter earnings call, Bakish laid out the benefits of combining with CBS.

Viacom and CBS have announced a series of management moves, in most cases eliminating executives with overlapping roles and responsibilities. He said there are opportunities for revenue synergies in distribution, advertising, content licensing and streaming. Those synergies are above $500 million in cost savings management is promising.

After CBS and Viacom reported earnings, Wall Street was concerned about spending on streaming content. Some of Bakish’s comments alleviated some of those worries.

“We are now a little more hopeful that a fresh perspective for the newly combined company can take a harder look at whether the returns from this incremental planned spending justify the investment,” said analyst Michael Nathanson of MoffettNathanson in a research note.

Since the merger was announced, Viacom and CBS have announced a series of senior management moves, largely designed to eliminate executives with duplicate functions.

Bakish, who ran Viacom, was named CEO and Joe Ianniello, who was acting CEO of CBS, is staying on to run the CBS-branded assets.

Former Showtime executive Christina Spade will be executive VP and chief financial officer and Christa D’Alimonte was named executive VP general counsel and secretary. She held a similar post at Viacom.

Nancy Phillips joined the company from Nielsen and will be executive VP, chief people officer.

On the content side, senior executives will include David Nevins, formerly chief creative officer of CBS and CEO of Showtime, and Chris McCarthy, president of MTV, VH1, CMT and Logo.

Nevins will oversee CBS Television Studios, the CBS Television Network’s entertainment division, Showtime Networks, Pop and programming for CBS All Access. He will also oversee CBS’s interest in The CW as well as BET, which is led by president Scott Mills.

McCarthy will be president of entertainment and youth brands, ViacomCBS Domestic Media Networks. He will be adding Comedy Central, Paramount Network, Smithsonian Channel and TVLand to his portfolio.

The company’s digital businesses will be led by Marc DeBevoise, who had been president and COO of CBS Interactive. He becomes chief digital officer of ViacomCBS and CEO of CBS Interactive, adding Viacom Digital Studios to his portfolio.

Kelly Day continues as president of Viacom Digital Studios and Phil Wiser, chief technology officer of CBS, will be CTO for the combined company, reporting to DeBevoise.

Tom Ryan, CEO and co-founder of Pluto TV will continue to run the ad-supported streaming service acquired by Viacom earlier this year.

On the revenue front, Ray Hopkins, president of television networks distribution for CBS, will be president U.S. Network distribution for ViacomCBS.

Jo Ann Ross, who had been president and chief advertising revenue officer of CBS, takes a similar title for the combined company. John Halley, who had been executive VP and chief operating officer, ad solutions, at Viacom, will be chief operating officer, advertising revenue, and executive VP for Advanced Marketing Solutions, reporting to Ross.

Armando Nunez, president and CEO of CBS Global Distribution group and chief content licensing officer, becomes chairman, global distribution and chief content licensing officer for ViacomCBS.

Paula Kaufman continues as the combined company’s head of global consumer products.

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