Shari Redstone finally pulled it off: a deal reuniting Viacom and CBS, the two media titans her father Sumner broke apart 13 years ago.
The merger announced on Tuesday has been in the making for several years — with National Amusements Inc., the Redstones’ Norwood-based movie theater business, at the heart of it. National Amusements doesn’t just run the Showcase Cinemas chain. It also acts as the holding company through which the Redstone family controls 80 percent of the voting shares in both CBS and Viacom.
CBS and Viacom last came close to merging in the spring of 2018, but as typical with the CBS-Viacom soap opera, personalities got in the way. Then-CBS chief executive Les Moonves clashed with Shari Redstone over the merger, with Viacom’s valuation and the combined company’s leadership particular sticking points. Moonves apparently wanted his protégé at CBS, Joe Ianniello, to succeed him, while Bob Bakish, the head of Viacom, was seen as Redstone’s choice. Redstone tried to exert control while CBS tried to ease itself out from under the Redstone shadow. Things got ugly.
Moonves was eventually shown the door, one of the most high-profile executives to fall in the #MeToo wave of sexual misconduct allegations. His departure helped usher in a détente between the two factions. National Amusements agreed not to push the CBS-Viacom merger for two years, but that didn’t rule out leaders at either company from promoting it on their own. That was fine with Redstone — sooner or later, the deal would come.
In the end, Ianniello and Bakish both survive in what will be called ViacomCBS Inc. — Bakish as chief executive, and Ianniello as head of the CBS portfolio. Redstone, who works primarily out of New York City now, maintains control: National Amusements keeps its majority voting stake, and she becomes chair of the new board.
Redstone left it to Bakish, Ianniello, and chief financial officer Christina Spade to hold forth with analysts about the merger’s nitty-gritty details and purported benefits on a conference call Tuesday afternoon. CBS shareholders will own 61 percent of the combined company, while Viacom shareholders own the rest after the deal closes at the end of the year. Together, the two companies generate more than $28 billion in revenue. Expect $500 million in annual savings within two years, and a boost to earnings soon after the deal closes.
The deal brings together Viacom’s Paramount movie studio and its cable TV networks — MTV, Nickelodeon, BET, among them — with CBS, Showtime, and the Simon & Schuster publishing house. Now, you will probably see Paramount movies on Showtime’s premium channel, or Viacom’s programming on the CBS All Access streaming service.
Sumner Redstone used to say “content is king,” and that mantra is more true than ever in the media business. That’s why AT&T paid big money and took on the Trump administration for Time Warner, and Disney beat out Comcast in fierce bidding for 21st Century Fox. As more consumers cut the cable cord, media companies are racing to come up with new ways to get their programs to viewers. Subscription services, made famous by Netflix, are all the rage now.
Analysts on the CBS-Viacom call seemed to wonder aloud whether the two companies, once united, will still be big enough to compete over the long haul. The Viacom/CBS executives made it clear they would be looking to acquire more content producers along the way, to build the already enormous media library.
The executives also emphasized the power of the content that CBS and Viacom are currently creating: It’s the result of some $13 billion in combined annual spending, one of the largest amounts in the industry. They plan to sell shows to third-party channels — Netflix, Disney+, and the like — and beef up their own subscription services.
It’s the vision that Shari Redstone has pushed all along, that the two companies were stronger together than apart in this shifting media landscape.
In her Sumner Redstone biography “The King of Content,” Keach Hagey describes Shari Redstone as “her father’s daughter: doggedly determined, shrewd, and not particularly patient.”
The way Shari Redstone endured through all these negotiations, corporate machinations, and backroom deals indicates she possesses those first two traits in spades. But she also had to show patience, too, to finally emerge victorious.