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CBS and Viacom agree to massive merger

In this illustration, a piece of paper with the CBS and Viacom logos are taped together.
Illustration: Sarah Grillo/Axios

CBS and Viacom reached a deal on Tuesday to merge into ViacomCBS Inc., reuniting the 2 companies 13 years after they split apart.

Why it matters: The deal will bring together Viacom's nearly two dozen cable channels with CBS' flagship broadcast network and its premium cable network, Showtime. The combined scale from the merger will help the new company broker stronger distribution deals with Pay-TV providers and allow it to better compete for audience attention and ad dollars.

Details: The all-stock merger creates a combined company with more than $28 billion in total revenue, according to ViacomCBS' press release.

  • Deal terms: The deal is expected to close by the end of the year. CBS shareholders will own approximately 61% of the combined company and existing Viacom shareholders will own approximately 39% on a fully diluted basis, per the release. Viacom shareholders will receive 0.59625 CBS shares for each of their shares. The deal values Viacom at $11.8 billion, which is slightly lower than its market capitalization as of Tuesday afternoon.
  • Leadership: As expected, Viacom CEO Bob Bakish has been appointed to run the new media behemoth, while acting CBS CEO Joe Ianniello will serve as chairman and CEO of CBS. Other top CBS executives will remain in their roles. CBS Chief Financial Officer Christina Spade will become EVP and chief financial officer of the company and Viacom Executive Vice President and General Counsel Christa D’Alimonte will become EVP, general counsel and secretary.
  • Board structure: As previously reported, the board of directors of the new company will consist of 13 members — 6 independent members from CBS, 4 independent members from Viacom, the President and CEO of ViacomCBS (Bob Bakish) and two National Amusements, Inc. (NAI) designees. Shari Redstone, the majority shareholder of both companies, will be appointed Chair.
  • Direction: The company plans to focus its growth efforts on direct-to-consumer products and producing and licensing content on third-party platforms. Its combined library will include more than 140,000 TV episodes and 3,600 movies.

The big picture: The companies have been dancing around a deal for the past 3 years, but drama over who would control the combined company has derailed progress. Now that longtime CBS CEO Les Moonves is out, Redstone finally had the leverage to push the deal over the finish line.

  • Redstone and National Amusements couldn't propose a deal for many more months, according to a 2018 settlement with CBS. However, the settlement didn't exclude the CBS or Viacom boards from proposing a merger themselves.

What's next: This deal could be the first part of a much bigger plan for Shari Redstone, the majority shareholder of both companies. Reports suggest that Redstone is looking to acquire other entities to give the combined company more scale.

  • Yes, but: A combined CBS-Viacom company would still be small compared to the entertainment giant created through the merger of Disney and most of Fox last year. It would also be much smaller than tech giants like Amazon and Netflix.