Reunification: CBS and Viacom get back together

Split in 2005, both companies re-merge in order to compete with other entertainment giants

In news that was expected for several months, it is now official: CBS Corporation and Viacom, Inc. are re-merging after nearly fifteen years apart.

The company will be known as ViacomCBS.

The reunification returns several well-known properties to one roof: CBS, with its top-rated broadcast network, Showtime, CBS All-Access, CBSN, and CBS Sports Network and Viacom with cable networks MTV, VH1, BET, Comedy Central, and the Paramount Network (formerly Spike, TNN, and the Nashville Network.)

Unlike the last merger between the two, there are some differences: there is no longer a radio division, as CBS sold it off to Entercom in 2017; and UPN is defunct as it was closed months after the split and merged with The WB to form The CW, who Viacom will now gain part-ownership with AT&T’s Warner Media. The outdoor business CBS received in the split was spun-off and renamed Outfront in 2014.

Viacom CEO Bob Bakish takes the same role in the new company; CBS acting CEO Joesph Ianniello serves as CEO of CBS. Shari Redstone, whose father Sumner oversaw both separate CBS and Viacom companies becomes chairwoman of the board of the combined company. Under the new structure, CBS shareholders would own 61 percent with Viacom shareholders owning the other 39 percent.

Pushed by Ms. Redstone, there were rumblings of a possible reunification in 2016 and again last year, but was foiled by CBS Chairman Les Moonves. But Moonves was forced out from his position due to sexual harassment allegations, removing an obstacle in reuniting the two companies.

Viacom’s roots date back to 1971, when CBS was forced to spin-off syndication company CBS Enterprises to shareholders after the financial interest and syndication rules were put in place, barring the Big 3 networks from the syndication business. Viacom grew from a syndicator of off-network and first-run shows in the 1970s (with its trademark “V of Doom” logo) to a powerhouse conglomerate by the mid-1980s, acquiring MTV, Nickelodeon, and several TV and radio stations (including WLAK/WLIT-FM in Chicago.) Its syndication unit shattered records with the off-network sale of The Cosby Show, netting a then-record $4 million per episode. Mr. Redstone’s National Amusements bought a controlling share of Viacom in 1986.

In 1994, Viacom merged with Paramount Communications in a hard-fought $9.7 billion deal as it was battling Barry Diller’s QVC for rights to the film studio. In order to keep Diller at bay, Viacom acquired Blockbuster Entertainment for $8.4 billion the same year. With the fin-syn rules expiring in 1995, it set the stage for Viacom to acquire the media company it spun off from – CBS, in a $36 billion deal announced on September 6, 1999.

Deva Vu: CBS and Viacom merged as this USA Today headline from September 8, 1999 attests.

In 2005, Viacom chairman Sumner Redstone wanted to get more value from his properties and at the time, cable TV was still growing while broadcast lagged. So he split the conglomerate into two separate, publicity traded companies: CBS Corporation, who owned the broadcast network, TV and radio stations and the outdoor business; and the new Viacom, focused on its cable properties. But since, cable has been hampered by cord-cutting amid declining revenues while CBS retained its top-ranked position among broadcast networks and receives tons of retransmission revenue from cable and satellite providers.

As part of the agreement, CBS took control of the entire television library, leaving Viacom with very little product aside from the existing shows they produced for their cable networks.

In recent years, streaming has grown into a massive beast as young viewers are watching less “linear” TV and finding more programming on Netflix, Hulu, Amazon and others. This led Viacom to reunify with CBS as other companies – notably Disney after its $71.3 billion acquisition of 21st Century Fox excluding its TV stations, broadcast, cable news and sports networks. Even with the reunification of CBS and Viacom, the combined company still lags behind the size of Disney, Comcast, Apple, and AT&T in the terms of scale.

Other aspects of the re-merger remains to be seen. ViacomCBS could go after one or two of the several independent media companies left, such as Discovery, Lionsgate, or Starz. It is too early to tell if programming from Viacom’s cable networks would make their way onto CBS All-Access.

Also remaining to be seen is how this impacts the local television business. CBS owns 28 stations in 17 markets with six duopolies in the top ten. During Les Moonves’ reign, the O&Os weren’t exactly a priority for CBS Corporation as ratings for some of their stations suffered. In Chicago, CBS-owned WBBM-TV often places fifth in total-day ratings with weak newscast ratings, while the CBS duopoly in Detroit still lacks a news operation. CBS did announce last week it would expand its successful CBSN local concept to more markets, including Chicago.

ViacomCBS also inherits a large syndication unit, with numerous shows ranked among Nielsen’s top ten of most-watched syndicated shows: Entertainment Tonight, Jeopardy!, Wheel Of Fortune, Judge Judy, and Dr. Phil, all under the CBS Television Distribution name. After CBS merged with Viacom in 1999, the outfit had two syndication companies: Paramount Domestic Television and King World, whom CBS acquired the same year. A year after CBS and Viacom split, the King World unit folded into CBS Paramount Television, which became CBS Television Distribution.

Even though CBS has a large off-network library, it lacks a recent off-net sitcom hit along the lines of Friends and Seinfeld. But their strong first-run syndication presence makes up for it to some degree.

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