In the latest example of major consolidation in the media industry, CBS and Viacom have officially agreed to conduct a long-awaited merger, creating a new company called ViacomCBS with a combined market cap of around $30 billion. The deal will merge CBS's broadcast offerings and the Showtime network with MTV, Comedy Central, the Paramount film studio and other Viacom brands, adding a broad collection of new content to CBS All Access, the network's existing streaming service.
As consumer tastes have evolved and in-home streaming has emerged as perhaps the dominant entertainment form of our time, many of the industry's biggest players have turned to M&A to augment their offerings. It's been a little more than a year since AT&T acquired Time Warner for $85 billion, adding brands like HBO and Turner to its stable. And earlier this year, Disney beat out Comcast to purchase a raft of TV and film assets from 21st Century Fox for approximately $71 billion, making major content additions ahead of the planned launch of its Disney+ streaming service. Disney also took control of Hulu earlier this year, valuing the streaming pioneer at $15 billion.
The newly formed ViacomCBS, though, will be considerably smaller than some of its streaming competition. AT&T and Disney both have market caps of over $240 billion, making them more than 8x the size of ViacomCBS. Netflix carries a market cap of more than $135 billion, even after its stock has slid in recent weeks in the wake of disappointing 2Q results.
The combination of Viacom and CBS has long been rumored, due largely to the very close ties between the two New York-based companies. They were in fact the same company until 2006, when media tycoon Sumner Redstone split them into two entities. Redstone and his National Amusements holding business have maintained control over both Viacom and CBS in the years since, with his daughter Shari Redstone assuming more power in recent years as her father has reportedly battled health issues.
Current Viacom president and CEO Bob Bakish will assume those same roles at the new ViacomCBS, while Joe Ianniello, the acting head of CBS, will remain in charge of CBS-branded assets. Ianniello has been the interim CEO at CBS since longtime leader Leslie Moonves stepped down last September following several allegations of sexual harassment.
Featured image via DNY59/E+/Getty Images
Related read: Can Netflix fend off big-name challengers?