CBS and Viacom have agreed to combine in an all-stock merger, reuniting the two halves of a historic media empire looking to compete in an entertainment industry that has been upended by Netflix.
The companies agreed to convert each Viacom share into 0.59625 shares of CBS, valuing Viacom at about $28.80 a share, or about $12bn. CBS shareholders will control about 61 per cent of the combined group, which will be renamed ViacomCBS.
The merged group brings together the most-watched US broadcast TV channel, home to shows like 60 Minutes and The Big Bang Theory, with the owner of the Paramount Pictures film studio and a portfolio of cable channels.
The reunion of the sister companies, which are both controlled by the Redstone family, has been years in the making, fraught by family feuds and the dramatic fall of CBS’s longtime leader Les Moonves.
After Mr Moonves was ousted following devastating allegations of sexual misconduct, CBS’s board was revamped. The boards of CBS and Viacom have spent the northern summer discussing the merger once again, although talks ramped up in the past few weeks, according to people familiar with the matter.
Bob Bakish, a longtime Viacom executive who was promoted to CEO in 2016, will lead the combined company. He has worked to revive the fortunes of Viacom, home to once dominant television networks like MTV that have lost audiences in the era of Netflix. The 55-year-old has been credited with bringing stability to Viacom, which last week reported that domestic advertising sales rose for the first time in 20 quarters.
Joe Ianniello, who has been acting chief executive of CBS since the departure of Mr Moonves, will continue running CBS, under the agreement.
The deal will create a company with more than $28bn in combined annual revenues, and is expected to deliver about $500m in annualised savings through synergies within 12 to 24 months after the transaction is closed.
The agreement marks a victory for Shari Redstone, heir to the Redstone family business, which has been a dominant force in US media for decades. Ms Redstone will be chair of the board of the newly combined group.
Fourteen years ago her father, Sumner Redstone, decided to break up CBS and Viacom, as he was convinced it would unlock the value of Viacom, which at the time was airing some of the most popular shows on TV while CBS was considered to be a drag on the overall company.
However, under Mr Moonves’ stewardship, CBS grew faster than Viacom over the years, leading Shari Redstone to consider reversing her father’s decision of splitting the businesses, which are both controlled by National Amusements, the Redstone family investment vehicle.
CBS’s board had previously resisted a merger of the companies. But in light of the megamergers of Disney with Fox and AT&T and Time Warner, the combination of CBS and Viacom, now relative minnows in the entertainment industry, was viewed as a “logical move”, according to people close to the board.
Ms Redstone said on Tuesday: “My father once said ‘content is king,’ and never has that been more true than today”.