CBS and Viacom Complete Merger: ‘It’s Been a Long and Winding Road to Get Here’

Cynthia Littleton

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CBS Corp. and Viacom are united once again.

The merger of the two halves of the Redstone family media empire into ViacomCBS was completed Wednesday, just four months after the boards of CBS and Viacom reached an agreement on an all stock-swap transaction. The combined company’s shares will begin trading Thursday on the NASDAQ index under the ticker symbols VIACA (for preferred shares largely held by the Redstones) and VIAC (for common shares).

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The deal brings Viacom’s Paramount Pictures and cable channels such as MTV, Nickelodeon, Comedy Central and BET together with the CBS broadcast network, Showtime, 28 O&O TV stations, CBS All Access and Simon & Schuster. The combined company, lead by Viacom CEO Bob Bakish, will have annual revenue of about $28 billion.

“I can’t wait to get on with this,” Bakish told Variety on Tuesday. “It’s been a long and winding road to get here. It’s an incredible collection of assets.”

Getting the merger over the finish line is a victory for Shari Redstone, who is the controlling shareholder in CBS and Viacom through her National Amusements Inc. holding company. Redstone has long sought to reunite CBS and Viacom, which were brought together in 2000 by her father, Sumner Redstone. But Sumner Redstone decided to split them up again, as of January 2006, out of frustration with Viacom’s sagging stock price.

Shari Redstone will serve as chairman of ViacomCBS. That’s a capstone on her three-year quest to reshape her family’s media holdings after years of executive rivalries, fiefdoms and executive largess at the companies that are less vulnerable to shareholder pressure on performance because of NAI’s iron grip on about 80% of voting shares in both firms. Indeed, the merger process was able to close quickly because the Securities and Exchange Commission and other federal regulators already considered Viacom and CBS to be under the same roof.

The challenge for Bakish and Redstone this time around is to make ViacomCBS function as an integrated company — something that did not happen during the first merger. The CBS Corp. assets will have a dedicated leader in Joe Ianniello, who shifts from acting CEO to chairman-CEO of CBS, a structure that was mandated by the CBS Corp. board as part of the merger. That has raised questions about whether the companies will remain balkanized.

But the enlarged ViacomCBS will emerge to do battle in a much more treacherous competitive landscape than they faced two decades ago. Even in bolting the companies together, there are questions about whether ViacomCBS is big enough to do battle with the tech giants that are up-ending traditional media and entertainment.

CBS Corp. has also been battered by allegations that its corporate culture allowed harassment and discrimination to persist. The ouster of former CBS chairman-CEO Leslie Moonves in September 2018 amid allegations of past sexual misconduct set the stage for the CBS-Viacom reunion. Shari Redstone has frequently cited the importance of a healthy and vibrant creative culture within CBS and Viacom as one of her top governance priorities.

While the merger is now complete, the new company has work to do yet on Wall Street. CBS and Viacom shares have dropped about 19% and 24%, respectively, since the long-expected deal was confirmed on Aug. 13.

The company has promised to deliver at least $500 million in synergy savings within two years of the closing — a number that suggests that there will be inevitable layoffs as overlapping operations are eliminated. ViacomCBS expects to offer more financial guidance for the company after the release of the enlarged company’s first earnings report in February.

On the day before the deal closed, Bakish was nothing but bullish about the company’s ability to thrive amid the growing global demand for content and the increasing value to be mined from large film and TV libraries, which ViacomCBS has to the tune of 140,000 episodes of TV and more than 3,600 movie titles.

“We have an extraordinary opportunity to create value for a whole range of constituencies,” Bakish said. “We have a tremendous library and ongoing production that we can deliver for our owned platforms and third-party buyers. We are setting up the organization of the company to enable us to leverage every asset we have.”

Bakish also said he sees a silver lining in the stock swoon of the past few months. He has no doubt that the company will be able to execute on its growth strategies quickly enough to quiet the doubters.

“There’s a light at the end of the tunnel,” Bakish said. “The people who got in at this (low share) price are going to be happy campers.”

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.

SEPTEMBER: Viacom launches BET Plus streaming service as a joint venture with Tyler Perry

OCTOBER: CBS veteran Jo Ann Ross named chief advertising revenue officer for ViacomCBS. Ray Hopkins named head of U.S. distribution.

NOVEMBER:

** Marc DeBevoise named CEO of CBS Interactive as longtime leader Jim Lanzone steps down.

** ViacomCBS shuffles creative leadership with CBS chief creative officer David Nevins tapped to oversee BET Networks, in addition to his CBS duties. Viacom’s Chris McCarthy adds Comedy Central, Paramount Network and Smithsonian channel to his portfolio.

** Nielsen alum Nancy Phillips named head of human resources for ViacomCBS. Marva Smalls is tapped to serve as global head of inclusion.

DECEMBER: CBS-Viacom merger completed

(Pictured: Bob Bakish, Shari Redstone, Joe Ianniello)

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