CBS, Viacom Agree to $30 Billion Re-Merger

Thirteen years after Viacom spun off CBS as a wholly owned subsidiary, the two companies are re-merging under the same corporate umbrella.

The two entertainment companies Aug. 13 announced a definitive agreement to combine in an all-stock $30 billion merger, creating a combined company — ViacomCBS Inc. — with more than $28 billion in revenue.

CBS shareholders will own approximately 61% of the combined company and Viacom shareholders will own approximately 39%.

The combined company will be led by Bob Bakish, current CEO of Viacom, with Joe Ianniello, acting CEO at CBS, becoming president/CEO of CBS.

The two companies, whose assets include Paramount Pictures, BET, MTV, Comedy Central, Showtime, CBS All Access, among others, expect to save $500 million in combined synergies — about half of what they originally sought.

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The pact was spearheaded by Shari Redstone, who runs National Amusements Inc., parent to both Viacom and CBS, for her ailing father, Sumner Redstone. NAI holds approximately 78.9% and 79.8% of the Class A voting shares of CBS and Viacom, respectively.

Shari Redstone has eyed the reunion as a means for Viacom and CBS better competing against a rapidly evolving media landscape, which includes subscription streaming video-on-demand.

“My father once said ‘content is king,’ and never has that been more true than today,” Redstone said in a statement. “Through CBS and Viacom’s shared passion for premium content and innovation, we will establish a world-class, multiplatform media organization that is well-positioned for growth in a rapidly transforming industry.”

ViacomCBS contends it would be better able to scale globally, with leadership positions in markets across the U.S., Europe, Latin America and Asia.

In addition to a significant television business in the U.S., the combined company possesses a portfolio of direct-to-consumer platforms, including both subscription (CBS All Access, Showtime OTT) and ad-supported (Pluto TV) offerings. It also includes Paramount Pictures and Paramount Home Entertainment.

“Today marks an important day for CBS and Viacom, as we unite our complementary assets and capabilities and become one of only a few companies with the breadth and depth of content and reach to shape the future of our industry,” Bakish said in a statement.

Ianniello said the merger brings a new set of opportunities to both companies.

“At CBS, we have outstanding momentum right now — creatively and operationally — and Viacom’s portfolio will help accelerate that progress,” Ianniello said.

In addition to Bakish and Ianniello, the company will include Christina Spade as EVP and Chief Financial Officer, and Christa D’Alimonte as EVP, General Counsel and Secretary.

The deal was originally delayed after former CBS boss Les Moonves sought the CEO position among the combined companies. Shari Redstone wanted Bakish.

Moonves dropped out of discussions when he was forced out at CBS following a series of #MeToo allegations.

Viacom, CBS Agree on Merger Price

The expected re-merger between Viacom and CBS has reportedly found common ground on the all-stock transaction’s price at around Viacom’s $12 billion market valuation.

Bloomberg, citing sources familiar with the deal, says the merger, which would re-unite parent Viacom and CBS after 13 years, could be announced as early as today.

Specifically, Viacom would get 0.59625 a share of CBS for each of its own shares. A year ago, Viacom had sought 0.6135 a share of CBS.

The two companies, whose assets include Paramount Pictures, BET, MTV, Comedy Central, Showtime and CBS All Access, among others, are looking to save $500 million in combined synergies — about half of what they originally announced.

The deal was originally delayed after former CBS boss Les Moonves sought the CEO position among the combined companies. Shari Redstone, who runs Viacom/CBS parent company, National Amusements Inc. for her ailing 94-year-old father, Sumner Redstone, wanted Bob Bakish, CEO of Viacom, to hold the position.

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Moonves dropped out of discussions when he was forced out at CBS following a series of #MeToo allegations.

Now Bakish is seen inheriting the CEO position, which leaves acting CBS CEO Joe Ianniello’s position unknown.

 

CBS, Viacom Re-Merger Nearly Complete; CBS Eyeing Higher Price Point for International ‘All Access’ Rollout

As expected, the Viacom and CBS re-merger could reportedly be announced as early as next week, pending last-minute stock exchange issues.

Fox Business’ Charlie Gasparino Aug. 9 on Twitter said the deal reuniting CBS with parent Viacom after a 13-year split is in the hands of the companies’ respective boards.

Viacom and CBS are majority owned by family-owned National Amusements, which is operated by Shari Redstone on behalf of her ailing 96-year-old father, Sumner Redstone.

Shari Redstone has pushed for the merger, claiming media consolidation is a perquisite for navigating the rapidly changing media landscape and over-the-top video distribution. She also wants Viacom CEO Bob Bakish to lead the combined companies.

Redstone’s strategy was initially rebuffed by former CBS CEO Les Moonves, who wanted the top job. With Moonves out following #MeToo issues, consummation of the merger seemed a formality.

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Separately, CBS says it will have 25 million combined CBS All Access/Showtime OTT subscribers by 2022.

To get there the media giant is rolling out All Access internationally in attempt to borrow a page from Netflix’s subscriber growth playbook.

All Access, like Hulu, is available with limited ads for $5.99 monthly, or ad-free for $9.99 ($11.99 for Hulu).

Speaking on the Aug. 8 fiscal call, acting CEO Joe Ianniello said the company would target Latin America and Europe with the more expensive $9.99 price point.

“Two-thirds of the All Access subs are taking the limited commercial option,” he said. “So obviously, the vast majority of that is the $9.99 price point.”

Ianniello contends there is strong demand for premium content delivered via broadband in the international marketplace.

“I just look at the number of people in the consumption of Netflix,” he said. “I’m very encouraged that this is single-handedly the largest opportunity that we have in front of us.”

Ianniello said CBS targets international distribution of proprietary content on franchise-per-franchise basis. Characterizing the U.S. market as “limited” to 325 million people, the executive contends a global audience in the billions satisfies long-term fiscal goals.

“Our thought is if [international is] willing to pay us [$9.99], we’re going to look at that hard,” Ianniello said. “But if they’re not, we’re going to put it through our own [domestic] infrastructure.”

With Disney announcing it would bundle pending SVOD service Disney+ with ESPN+ and Hulu, Ianniello said CBS is content limiting its OTT bundling to All Access and Showtime.

“I can understand why others want to kind of do that together because people will subscribe for different reasons,” he said.

With All Access nearly five years old, Ianniello says the company understands its appeal and marketing with Showtime.

“It’s an opportunity we don’t force consumers to do it,” he said. “They can buy part; if they want to buy them together, we obviously discount that. We think again those are different offerings and complementary as well.”

CBS All Access Adding Children’s Programming

CBS All Access, the media giant’s online TV service and VOD platform, Aug. 8 disclosed it plans for the first time to add children’s programming, including original series and more than 1,000 catalog episodes.

The $5.99 monthly platform has teamed up with DHX Media and Boat Rocker Studios to license new seasons of “Cloudy With a Chance of Meatballs,” produced with Sony Pictures Animation, and Boat Rocker’s “Danger Mouse,” produced with BBC Children’s Productions.

Catalog programming includes the original “Danger Mouse” series, “Inspector Gadget,” “The Adventures of Paddington Bear, “Madeline,” and “Heathcliff,” among others.

“Based on the age and demographics of our subscriber base, with an average age of 44, we see a significant opportunity to invest in children’s programming and provide even more value for subscribers,” Marc DeBevoise, COO, CBS Interactive, said in a statement.

Earlier this year, CBS All Access announced it would add documentary and unscripted content, in addition to a growing roster of flagship series such as “Star Trek: Discovery,” “The Good Fight,” and “The Twilight Zone.”

Joe Ianniello, acting CEO at parent CBS Corp., said the direct-to-consumer services, which includes Showtime OTT, helped fuel a 13% increase in affiliate and subscription fee revenue in the quarter.

“We remain on track to reach our goal of 25 million subscribers [CBS All Access/Showtime] combined by 2022,” he said in a statement.

Indeed, content licensing and distribution revenue in the quarter increased 18%, mainly from growth in domestic licensing and higher sales of series produced for third-party services, including Netflix and Amazon Prime Video.

Affiliate and subscription fee revenue grew 22%, driven by increases in station affiliation fees and revenues from online TV, as well as subscriber growth at CBS All Access.

‘Elementary’ Final Season Due on DVD in September

Paramount Home Entertainment and CBS in September will release DVDs of the ninth season of “Hawaii Five-0,” the second season of “SEAL Team,” the third season of “The Good Fight” and the final season of “Elementary.”

Due Sept. 10 on DVD is Hawaii Five-0: The Ninth Season. The remake of the classic series focuses on an elite federalized task force whose mission is to wipe out the crime that washes up on the islands’ sun-drenched beaches. Detective Steve McGarrett, a decorated Naval officer turned cop, returned to Oahu after Hawaii’s former governor persuaded him to head up the new team.

Also due on DVD Sept. 10 is SEAL Team: Season Two. David Boreanaz stars as the leader of an elite unit of Navy SEALs as they train, plan and carry out dangerous, high-stakes missions.

Due on DVD Sept. 17 is Elementary: The Final Season and Elementary: The Complete Series.

“Elementary” stars Jonny Lee Miller as Detective Sherlock Holmes and Lucy Liu as Dr. Joan Watson in a modern-day drama about a crime-solving duo that cracks the NYPD’s most impossible cases.

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Also on track for Sept. 17 is the DVD of The Good Fight: Season Three. The spinoff of “The Good Wife” is an original series on CBS All Access and stars Christine Baranski, Delroy Lindo, Audra McDonald and Rose Leslie as attorney’s dealing with an ever-increasing politicized world.

‘Big Bang Theory’ Final Season on Disc Nov. 12

Warner Bros. Home Entertainment will release The Big Bang Theory: The Twelfth and Final Season on Blu-ray and DVD Nov. 12.

The set will include “From Script to Screen” featurette about the final episode with behind-the-scenes and cast interviews, a gag reel, the CBS special “Unraveling the Mystery: A Big Bang Farewell,” and a digital copy of the episodes.

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Also due Nov. 12 is The Big Bang Theory: The Complete Series on Blu-ray and DVD.

The limited-edition Blu-ray will include all 279 episodes with nearly 12 hours of extras plus an additional disc with three never-before-seen featurettes, including a retrospective; a premium lay-flat book with pop-up art featuring the entire cast; a 32-page episode guide with an introduction from creator and executive producer Chuck Lorre; and digital copy offer for every episode.

YouTube TV Offering Free Showtime This Summer

YouTube TV, the Google-owned social video behemoth’s online TV platform, reportedly is offering select subscribers free access to Showtime through Sept. 5.

The special offer for the CBS-owned premium channel — first reported by 9to5Google.com — was emailed to “longtime” friends of YouTube TV, which launched in 2017 for $35 monthly fee. In April, Google upped the fee to $49.99.

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YouTube TV currently charges subscribers a $11 monthly surcharge for Showtime and other premium channels, including HBO.

The platform reassured subs it would not automatically begin billing them for Showtime once the promotional period ended.

Sony, Viacom, CBS, Showtime, NBC Universal, AMC Network Join Growing Studio Sentiment Not to Work in Georgia Should Anti-Abortion Law Go Into Effect

Then the dam broke.

Sony Pictures, Viacom, CBS, Showtime, NBC Universal and AMC Networks, which has produced “The Walking Dead” in Georgia for more than 10 years, May 30 joined a bandwagon of Hollywood studios, producers and actors who have said they would cease doing business should the state’s new anti-abortion law go into effect on Jan. 1, 2020.

Gov. Brian Kemp signed the legislation on May 8 making it unlawful for a woman to have an abortion six weeks after pregnancy. Georgia currently bans abortions after 20 weeks.

The issue is unique to Georgia, which has become a prolific location for movie and TV show production, reportedly  accounting for 40 current content production outside of California and New York.

“If this highly restrictive legislation goes into effect, we will re-evaluate our activity in Georgia,” AMC said in a statement.

The network, which was one of the first to produce content in the Peach state with “Walking Dead,” said similar laws passed in other states have been challenged and so would the measure in Georgia.

“This is likely to be a long and complicated fight and we are watching it all very closely,” AMC said.

A spokesperson from Comcast-owned NBC Universal said the media company doesn’t expect the law to go into effect, but is ready to act if required.

“If any of these laws are upheld, it would strongly impact our decision-making on where we produce our content in the future,” said the spokesperson.

A Sony Pictures rep echoed the sentiment saying the Culver City, Calif.-based studio would continue to monitor the situation and “would consider our future production options” if warranted.

Report: CBS, Viacom to Rekindle Merger Discussions

Media giant Viacom (parent to Paramount Pictures) and CBS reportedly are set to begin in June renewed discussions about a possible merger — nearly 20 years after Viacom created CBS Corp. through a spin-off.

CNBC, citing sources familiar with the situation, say the two companies controlled by Sumner Redstone and his daughter Shari Redstone’s National Amusements corporate umbrella are seeking to “bulk up” the balance sheet in a rapidly evolving media landscape underscored by mergers and acquisitions.

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National Amusements has twice tried unsuccessfully to merge CBS back into the fold — efforts largely rebuked by former CBS CEO Les Moonves, who sought the top position in the merged companies. Sharri Redstone preferred Viacom CEO Bob Bakish in that role.

Moonves was forced out of CBS following multiple allegations of inappropriate workplace behavior toward women.

Scuttlebutt about a possible merger grew after Joseph Ianniello, acting CEO at CBS, had his contract renewed only to the end of the year, and search for a permanent executive was cancelled.

CNBC said the merger would likely be a stepping stone to further M&A activity, including a renewed bid for Lionsgate-owned Starz and SVOD platform Starz Play, and possibly Discovery Communications, home to HGTV, Food Network and DIY Network, among other properties.

Lionsgate Posts Quarterly, Fiscal-Year 2019 Losses

There might be a reason Lionsgate reportedly considered selling Starz to CBS for billions of dollars. The studio/distributor had a rough fiscal fourth quarter (ended March 31) and operating year 2019.

The Santa Monica, Calif.-based company posted a quarterly loss of $159.1 million compared to net income of $89.6 million during the previous-year period. Revenue fell nearly 13% to $913.7 million, compared with more than $1 billion in the year-ago period.

For the fiscal year, Lionsgate recorded a net loss of $284.2 million, compared with net income of $468.1 million in fiscal 2018.

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The motion picture segment saw revenue decrease 20% to $1.46 billion in the fiscal year, due primarily to a smaller film slate in fiscal 2018. Segment profit decreased 28% to $129 million.

The studio’s Robin Hood reboot, starring Jamie Foxx and Ben Mendelsohn, among others, misfired at the box office, generating just $30.8 million on a reported $100 million production budget. The title generated nearly $54 million internationally.

A more detailed look at home entertainment results is forthcoming pending release of the company’s 10K filing.

Regardless, CEO Jon Feltheimer tried to put a positive spin on the results.

“We’ve completed a very active and productive fiscal 2019 in which we set in place all the elements for strong growth and continued value creation in the year ahead,” Feltheimer said in a statement.

Meanwhile, Starz Networks — with 24.5 million pay-TV subscribers — generated operating profit of $108.6 million on revenue of $355 million. That compared to operating profit $114.7 million and revenue of $350.5 million in the previous-year period.

For the fiscal year, operating income reached $488 million on revenue of $1.44 billion. That compared to operating income of $468 million on revenue of $1.4 billion in 2018.

Starz’ much-hyped over-the-top streaming video service narrowed its operating loss to $1.8 million on revenue of $6 million. That compared to an operating loss of $7.7 million on revenue of $2.9 million in the previous-year period.

For the fiscal year, Stars OTT narrowed operating loss to $11.3 million from $38.9 million. Revenue increased to $18.1 million from $7.1 million in 2018.

“We’ve … refocused on extracting maximum value from our franchise properties and are capitalizing on an extraordinary opportunity to continue Starz’s global expansion and cement its stature as one of the leading international pure play subscription video-on-demand services,” Feltheimer said.