CBS stock closed at $40.68 on nearly triple its average trading volume. Viacom finished at $24.22 on six times normal volume.
The reunion of the companies — which operated under the same corporate tent from 2000 to 2006 — finally reached fruition after two previous rounds of formal merger talks collapsed. The merged company, whose market value will be about $25 billion, will be one-tenth of the size of Disney and Comcast, let alone tech giants with trillion-dollar valuations.
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Despite that size differential, ViacomCBS chairman Shari Redstone has insisted the company has potent enough assets to make a strong go of it. “We absolutely have enough scale,” she said last month in an appearance at the Paley Center for Media in New York. “People make a mistake and they look at scale as being about market cap. Scale is not about market cap. Scale is about the ability to create the quality and quantity of content that people want to see. … We can compete with the best of them.”
In a press release minting the combination, CEO Bob Bakish called it a “historic moment that brings together two iconic companies.” The deal, he added, “will create and deliver premium content for its own platforms and for others, while providing innovative solutions for advertisers and distributors globally.” Bakish also hailed the deal in a memo to employees (read it below).
Investors don’t seem initially bullish, however, Wednesday’s uptick notwithstanding. Shares in CBS and Viacom have slumped nearly 14% since the merger was first announced in August, eroding billions in value. Rumblings persist that the merger is merely “phase one” of a multi-phase effort to heavy up. In the past, Viacom held discussions with much larger firms like Verizon and Amazon. The marketplace also has smaller potential targets, including Lionsgate (which held unrequited discussions last year with CBS about a deal for Starz).
Strategic questions abound. Collectively, CBS and Viacom capture 22% of all U.S. TV viewing and spend $13 billion on programming across CBS, Showtime, MTV, Nickelodeon and a host of other networks, plus Paramount Pictures. That’s a large beachhead, but the best path to profit from all that content remains less than entirely clear. At the same time new subscription streaming offerings like BET+ have launched and CBS All Access and Showtime have racked up millions of subscribers after four years in the market, Viacom’s Bakish has opted to license out Nickelodeon properties to Netflix and South Park to HBO Max, to cite two recent nine-figure deals.
“Seems like they’ve got to pick a lane,” offers analyst Rich Greenfield of LightShed Partners. “It doesn’t work to have a grab-bag strategy,” one high-level media executive told Deadline. “You only make headway when you focus.”
The leadership team of ViacomCBS has gradually fallen into place in recent months. Bakish, an international operations vet who took the helm of Viacom in late 2015 after its disastrous latter years under former CEO Philippe Dauman, has long had Redstone’s support to continue in the corner office.
Joe Ianiello, acting CEO of CBS, was poised to earn $100 million in severance upon the close of the deal. His 15-month contract to continue running CBS assets through 2021 will entitle him to millions more. At one point seen as a serious candidate for the top job, he has kept a steady hand on the CBS tiller in perhaps the most turbulent time in the company’s 92-year history. Les Moonves, for many years one the most powerful executives in the media business, fell from his perch after accusations of sexual assault and misconduct from more than a dozen women.
Here is the full staff memo from Bakish:
I’m thrilled to share that our merger is closed, and we are now operating as ViacomCBS.
This is a historic moment for us, and it’s come at exactly the right time in this quickly evolving media landscape. Demand has never been higher for what we do best: create and deliver culture-defining content and experiences.
ViacomCBS brings together powerful consumer brands that have shaped media and entertainment for decades. It reunites America’s most watched network and Hollywood’s longest-running film studio; a suite of leading broadcast and premium pay-TV channels from the U.S. to Australia; a major force in consumer publishing; and one of the most innovative digital and streaming portfolios in the marketplace.
Our shared passion for storytelling is one reason why I believe our companies are a great fit. You see it in our incredible legacy of hit programming, from SpongeBob to 60 Minutes, Star Trek to South Park. We introduced audiences to Bobby Axelrod and Forrest Gump, Lucy Ricardo and Dora the Explorer. We aired the very first Super Bowl and have produced some of the most groundbreaking journalism since the dawn of the broadcast era. And now, we have a rare and exciting opportunity to drive the future of our industry as one of the largest and most influential content creators in the world.
Commercially, we will be the most important partner in the media ecosystem. We’ll deliver the largest share of the U.S. television audience and hold number-one positions in every demographic we serve. Our reach will extend across every platform and every price point – including ad-supported and subscription-based streaming services – making us a cornerstone offering for distributors. The combination of our audience reach with our leadership in advanced advertising and marketing solutions will make us the go-to choice for advertisers and agencies.
In production, we’ll be a global powerhouse, making premium content at scale in every genre through our own award-winning film and television studios. And we now have one of the most valuable libraries of entertainment out there – an extensive collection of iconic franchises with over 140,000 TV episodes and 3,600 film titles.
Beyond these complementary assets, we’ll leverage a massive global operating footprint that connects with more than 4.3 billion subscribers across 45 languages in nearly every country in the world. This competitive advantage will allow us to further extend our brands and IP well beyond the screen and even further into live events, consumer products, recreation and experiences.
In every respect, as ViacomCBS, we’ll be better positioned to serve audiences and our partners. But this is the beginning of our journey – not the destination. To realize all of the opportunities ahead, we need to continue the important work of becoming one company and one team while continuing to position our businesses even more strongly for the future. That’s why, in the coming months, you’ll be hearing more from me and the senior leadership team about our strategy for growth as a combined company.
Very importantly, we will also need to come together around a common mission and set of values that define our culture at ViacomCBS. These efforts, too, are underway, and we’ll be sharing more details with you soon.
Yes, this will all take a lot of hard work – and we’ll need to challenge ourselves to operate more nimbly, creatively and collaboratively – but with the leadership, talent and determination we bring collectively across our teams, I have no doubt we will deliver.
In the meantime, I know you have questions about the future and what’s next. Tomorrow, December 5 – now at 12:00pm ET – we’ll hold our first Bob Live employee townhall. Joining me will be Shari Redstone, Chair of ViacomCBS, for a conversation now moderated by Norah O’Donnell of CBS Evening News. We’ll be speaking about our vision for ViacomCBS, discussing next steps for the integration of our companies and answering any questions you may have. We really hope you’ll join us in person or online.
In the meantime, check out http://www.viacbs.com and follow @ViacomCBS on social platforms to stay updated on all the great work that’s happening across our company.
We’ve taken a big step forward, and it’s all thanks to you. I can’t wait for us to get started, and I look forward to speaking with you tomorrow about our exciting road ahead.