It’s Official: Redstone Reunification Set For CBS, Viacom

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It’s been talked about for months. Many suspected an announcement would come late last week, if not Monday.


At precisely 2:14pm Eastern, CBS Corporation distributed a formal announcement confirming what nearly everyone who follows the broadcast media industry already anticipated.

CBS is combining with Viacom some 13 years and eight months after CBS spun-off from Viacom to create two separate companies.

(Source: ViacomCBS Inc.)

“A definitive agreement to combine in an all-stock merger” was signed by the two companies, ending days of suspense as to the valuation of the transaction.

A range of between 0.59 and 0.60 CBS share for each Viacom share was expected, The Wall Street Journal reported Monday. “That ratio would value Viacom slightly below its market value as of Friday, which was about $12 billion,” the Journal noted. “As a result, CBS shareholders would own more of the combined company than CBS’s share price would imply.”

The Journal was correct. Under the terms of the merger agreement, each Viacom Class A voting share and Viacom Class B non-voting share will convert into 0.59625 of a Class A voting share and Class B non-voting share of CBS, respectively.

The last time the two companies explored a merger, the Journal said, CBS and Viacom explored an exchange ratio of roughly 0.61.

Existing CBS shareholders will own approximately 61% of the combined company and existing Viacom shareholders will own approximately 39% of the combined company on a fully diluted basis.

Closing is expected to occur by the end of 2019.

BAKISH LEADERSHIP

As has been long rumored, CBS confirmed in its Tuesday afternoon announcement that Viacom President/CEO Bob Bakish will serve in that role for the combined company.

It’s something disgraced former CEO Les Moonves fought hard to thwart.

His successor, President and acting CEO Joe Ianniello, will serve as Chairman/CEO of CBS, overseeing what will be a branded unit inside the combined company.

In prepared comments, Bakish said, “Today marks an important day for CBS and Viacom, as we unite our complementary assets and capabilities and become one of only a few companies with the breadth and depth of content and reach to shape the future of our industry. Our unique ability to produce premium and popular content for global audiences at scale – for our own platforms and for our partners around the world – will enable us to maximize our business for today while positioning us to lead for years to come. As we look to the future, I couldn’t be more excited about the opportunities ahead for the combined company and all of our stakeholders – including consumers, the creative community, commercial partners, employees and, of course, our shareholders.”

Ianniello added, “This merger brings an exciting new set of opportunities to both companies. At CBS, we have outstanding momentum right now – creatively and operationally – and Viacom’s portfolio will help accelerate that progress. I look forward to all we will do together as we build on our ongoing success. And personally, I am pleased to remain focused on CBS’s top priority – continuing our transformation into a global, multiplatform, premium content company.”

In addition to Bakish and Ianniello, the leadership team of the combined company will include Christina Spade as EVP/CFO; and Christa D’Alimonte as EVP/General Counsel and Secretary.

The reunification of CBS and Viacom was largely orchestrated by the two companies’ largest shareholder, National Amusements Inc. (NAI) — the company led by Shari Redstone and, before her, father Sumner Redstone.

Ms. Redstone, Vice Chair of the boards for both CBS and Viacom, said she was “really excited” to see the companies come together “so that they can realize the incredible power of their combined assets.”

Quoting the elder Redstone, Shari continued, “My father once said ‘content is king,’ and never has that been more true than today. Through CBS and Viacom’s shared passion for premium content and innovation, we will establish a world-class, multiplatform media organization that is well-positioned for growth in a rapidly transforming industry. Led by a talented leadership team that is excited by the future, ViacomCBS’s success will be underpinned by a commitment to strong values and a culture that empowers our exceptional people at all levels of the organization.”

Indeed, ViacomCBS Inc. will be the official name for the combined company.

The Board of Directors will consist of 13 members: six independent members from CBS, four independent members from Viacom, the President and CEO of ViacomCBS and two National Amusements Inc. designees. Ms. Redstone will be appointed Chair.

NAI holds approximately 78.9% and 79.8% of the Class A voting shares of CBS and Viacom, respectively.

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