CBS and Viacom’s $30 Billion Mega Media Merger
With the entertainment industry experiencing a shift from traditional paid TV services to streaming networks, production companies are trying everything they can to stay afloat. After three years of negotiations, media giants CBS and Viacom have finally reached a merger decision making them more competitive in a continuously changing industry. The mega-deal has been a long-term dream for vice chairwoman, Shari Redstone and results in combined company value of over $30 billion.
ViacomCBS’s portfolio will include CBS, MTV, Showtime, Nickelodeon, Comedy Central, Paramount Pictures, local tv stations, and international networks in Argentina, the United Kingdom, and Australia. The company will also control production units that create content for outside streaming parties like Amazon and Netflix. Past examples of these kinds of exchanges include CBS producing Dead to Me for Netflix and Viacom’s Paramount Pictures producing Jack Reacher for Amazon. Advertising revenues alone will ring in at about $11 billion, giving the company the upper hand in future negotiations with distributors.
Looking at why now, likely factors include Netflix’s growing 151 million subscribers, Disney and AT&T’s recent acquisitions activities, and the increase in network streaming services overall. Each company is only getting bigger, making the ViacomCBS merger seem like one of their only options to continue contending. Experts predict that the cost of owning and producing content is going to keep increasing making future mergers even more likely.
Although this specific merger took three proposals for the agreement to go through, shareholders on both sides seem to be supportive of the terms. Determining the right conditions for a deal takes time and trial, which allows both parties to find an agreement that satisfies all stakeholders. The last obstacle for ViacomCBS was the share price which board members worked overtime to agree upon, settling on giving 0.59625 CBS shares for each Viacom share.
For customers, the merger seems to be positive news as there will be an increased content library on both sides, and ViacomCBS will offer a variety of free and paid options on its platforms. Overall the entertainment industry will be one to watch as the consolidation of companies is expected to continue.
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