The corporate boards of Viacom and CBS agreed to merge in an all-stock deal Tuesday, reuniting the Redstone family's entertainment holdings after a series of legal battles and corporate intrigues.
The move is intended to enable the blended company valued at about $30 billion to fight off bulked-up competitors and a new threat from digital rivals with well-financed streaming services.
Viacom Chief Executive Bob Bakish is to oversee the new company, which will be called ViacomCBS. The deal would combine such well-known entertainment brands as CBS and Showtime with Viacom's Paramount television and movie studios, Nickelodeon, Comedy Central and MTV.
CBS also owns the book publisher Simon & Schuster. Current CBS CEO Joe Ianiello is to oversee the former CBS properties under Bakish.
"Our unique ability to produce premium and polar content for global audiences at scale - for our platforms and for our partners around the world - will enable us to maximize our business for today, while positioning us to lead for tomorrow," Bakish said in a statement.
The new chairwoman of the combined company is to be Shari Redstone, who controls the family's holding company, National Amusements, along with her 96-year-old father, Sumner Redstone. While Viacom and CBS are publicly traded, they are both controlled by the family through National Amusements.
It would seem unlikely that the merger would be blocked by federal regulators or antitrust lawyers. Viacom and CBS are largely not direct competitors, and the U.S. Justice Department recently lost its challenge to the AT&T takeover of Time Warner.
Yet even if the deal goes through, and even at its new heft, the new Viacom would remain on the smaller side.
Comcast, the parent of NBC and Universal, and AT&T, after its takeover of Time Warner and CNN, each combine Hollywood firepower with critical communication services via cable and the Internet as well as digital phones and mobile phones. They are vastly larger than ViacomCBS would be.
So too is the new Disney, further bolstered by its recent acquisition of much of Fox's entertainment holdings, including the Star Wars and Marvel franchises.
Like Disney, AT&T is moving aggressively to create a new entertainment streaming service. For AT&T, the service will focus on the DC comic books superhero franchises, its HBO programs and films, as well as its cartoon and movie archives.
Yet many are watching the nation's leading digital giants with great concern. Amazon and Netflix have dipped into seemingly bottomless wallets to draw creative talent away from conventional networks and studios, encouraging Americans to sever their cable subscriptions with a wealth of new shows. Apple is also embarking on offering original television content as well (it has had paid streaming services for years).
CBS has moved on streaming more than its broadcast rivals, with a digital 24-hour news service called CBSN and a paid entertainment streaming service. That service, called CBS All Access, has enjoyed some modest success with hits such as The Good Fight and a renewal of the Star Trek franchise.
Sumner Redstone split CBS from Viacom in January 2006 in the belief it would unshackle the more profitable entertainment vehicle Viacom from the lagging, old school network television divisions of CBS. As it happened, CBS proved the more dynamic company under Les Moonves, then CEO and later chairman.
As Sumner Redstone aged, Shari Redstone had to battle with her father's former girlfriends and his executives to ensure her position. CBS, led by Moonves, fought in the boardroom and courtroom to dilute the voting stake of National Amusements to prevent her gaining control of the company. But Moonves was derailed by a sexual assault and harassment scandal, which led to his firing. (He has denied the accusations.)
With Moonves gone, the path to the reunification of the two wings of the Redstone entertainment empire was far smoother. The more pressing problem now is that the new ViacomCBS may not be big enough to hold off its rivals in Hollywood or Silicon Valley. If it does not successfuly acquire other properties, the merged company may have just made itself appealing enough to be bought by a larger player, like Amazon — which doesn't have a network — or Verizon, which lacks any major TV presence.