After some false starts, CBS and Viacom announced Tuesday they will combine to form the latest media empire in a wave of mergers driven by the need for companies to reformulate themselves for the streaming era.
CBS shares gained 0.8% to $48.41 as of 9:40 a.m.in NY on Tuesday, while Viacom rose 0.3% to $28.62. The $6-a-month service now has a new "Star Trek" series, a revival of "The Twilight Zone" and archives of old and current broadcast shows.
The transaction is subject to regulatory approval, but is expected to close by the end of this calendar year. Which ever point of view you take, the result is this: ViacomCBS Inc.is now a stronger power player that combines the company's #1 ratings across all key TV demographics and strong performances across all genres with direct-to-consumer offerings (through subscriptions and ad-supported platforms), as well as feature film production through Paramount Pictures. It would also cap years of failed merger attempts and board infighting at both companies. That's far less than the 60 million USA subscribers that Netflix has, though it's comparable with the estimated number of subscribers to HBO Now, that network's stand-alone streaming service.
The deal was approved by the boards of directors of both CBS and Viacom by a unanimous vote.
CBS offers streaming to subscribers with CBS All Access and Showtime, while Viacom has the free streaming app Pluto TV and the upcoming BET+. They plan to sell shows to third-party channels - Netflix, Disney+, and the like - and beef up their own subscription services. However, the number of possible targets is dwindling, he said, with what's left mostly smaller companies such as the Discovery and the AMC television networks and the MGM and Lionsgate movie studios.
CBS and Viacom have had an on-again, off-again relationship.
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In her Sumner Redstone biography "The King of Content", Keach Hagey describes Shari Redstone as "her father's daughter: doggedly determined, shrewd, and not particularly patient".
The companies have sought a merger several times in recent years, but their management teams' differences were never bridged.
The troubled merger has been in talks for more than three years, with former CBS CEO Leslie Moonves taking the lead on opposing the reunification. In response, legacy media companies are consolidating to bulk up. Shari Redstone is the president of National Amusements and vice-chairwoman of both CBS and Viacom.
Moonves' ouster a year ago in the face of multiple sexual misconduct allegations changed the dynamic. 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.
CBS Corp and Viacom Inc have reached a deal to reunite media mogul Sumner Redstone's US entertainment empire, betting that a larger company will be able to compete and partner better in a media industry dominated by giants.