After years of on-again, off-again merger talks, broadcast giant CBS Corp. and its corporate sibling Viacom Inc. on Tuesday finally agreed to reunite in a $12-billion deal that will bring together such well-known brands as CBS, MTV, Nickelodeon and Showtime.
CBS, which is the larger of the two companies and worth $18.5 billion, will absorb the smaller Viacom, which owns such assets as MTV, Nickelodeon, BET, Comedy Central and the Paramount Pictures movie studio in Hollywood. Nonetheless, the new company is expected to take the Viacom name in a nod to the legacy of Sumner Redstone, the ailing 96-year-old media titan who built an empire from a small chain of drive-in movie theaters in the Northeast.
Viacom Chief Executive Bob Bakish will become chief executive and gain a seat on the board. Shari Redstone, the mogul's daughter, will become the first chairwoman in Viacom's history.
The proposed merger of the two New York-based companies is the latest in the wave of entertainment industry consolidations and was widely expected. It was the third time in three years that CBS and Viacom attempted to hook up.
The deal is a triumph for Shari Redstone, 65, who has overseen the Redstone family's controlling stakes in the two companies since her father's health declined. She pushed for the union, believing the pair would be stronger together during a turbulent time. The entertainment industry is facing intense pressure from technology behemoths Netflix, Amazon and Google Inc., which introduced popular alternatives to traditional television. The changing economics has created a sense of urgency among major Hollywood studios to fortify themselves by bulking up.
Last year, telecommunications colossus AT&T bought HBO, CNN, TBS and the Warner Bros. studio in an $85-billion deal. In March, Walt Disney Co. completed a $71.3-billion acquisition of much of Rupert Murdoch's Hollywood holdings.
CBS and Viacom suddenly found themselves medium-sized players, no longer leaders of the industry. But it wasn't just a consolidating industry and splintering audiences that drove the two companies together . Both were weakened by years of internal turmoil: boardroom battles, costly lawsuits, financial miscalculations and management woes.
The combined Viacom-CBS will be worth about $32 billion.
The Redstone family, through its Massachusetts-based investment vehicle, National Amusements Inc., controls nearly 80% of the voting shares of the two companies. The family firm already has approved the merger. Viacom shareholders will receive .59625 shares of CBS stock for every Viacom share that they own. On Tuesday, Wall Street valued Viacom at $12 billion.
The new company will be one of the largest players in TV advertising with a growing presence in the streaming space. It will have international exposure with networks in Britain, Australia and Argentina. CBS' premium channel, Showtime, will have access to movies from Paramount Pictures' deep library, which includes such properties as "The Godfather," "Top Gun" and "Transformers."