CBS Corporation (NYSE: CBS) and Viacom Inc (NASDAQ: VIAB) announced Tuesday afternoon they're merging, reuniting the entertainment companies that split more than a decade ago as they seek to compete in a world changing how it watches TV and movies.
The merger, which follows months and months of talks, creates a combined company with more than $28 billion in revenue.
The companies said in a press release that they agreed to an all-stock merger that would combine the largest U.S. television business with a major Hollywood studio in Paramount Pictures and other businesses that "accelerate CBS and Viacom's ability to deliver an array of compelling content to important and diverse audiences across both traditional and emerging platforms around the world."
What It Means
The merger was seen by both companies as a way to better compete in an entertainment business that has been racked by cord cutting and in which the move to streaming is seen as the wave of the future.
It joins Viacom properties that include cable networks MTV, Nickelodeon, and Comedy Central, as well as the Paramount TV and film studio, with CBS, which brings to the table its broadcast TV network and the Showtime cable network.
Bob Bakish, the CEO of Viacom, will become CEO of both companies, the companies said.
The two companies split in 2006 but both were controlled by National Amusements Inc., a holding company owned by media mogul Sumner Redstone and his daughter Shari.
"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," Bakish said in the statement.
Shares of CBS had surged earlier Tuesday, but dropped later in the day, trading around $48.73. Shares of Viacom took a similar path through the day and were trading Tuesday afternoon at just under $29.
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