Viacom And CBS Agree To Merge In $30B Deal

6 hours ago
Originally published on August 13, 2019 3:40 pm

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.

Copyright 2019 NPR. To see more, visit https://www.npr.org.

AILSA CHANG, HOST:

When you turn on the lights in your home or switch on your TV, you may be contributing to the warming of the climate - or you may not. It all depends on how your electric company is generating that power. Utilities are seen as key to slowing climate change. And to explain why, we are now joined by NPR's Dan Charles.

Hey, Dan.

DAN CHARLES, BYLINE: Hi, Ailsa.

CHANG: So I don't ever think about my electric company unless there's, like, some blackout. And then I'm like, what is going on? But why are electric utilities so important in fighting climate change?

CHARLES: Because electricity is the big hope. Electricity is the one big energy source that can be free of carbon emissions. You can make it from the sun. You can make it from the wind. Tap the heat of the Earth, hydro power.

CHANG: So many options.

CHARLES: Some people include nuclear. Other people say nuclear is too dangerous for other reasons. But that is the reason why utilities are sitting right in the middle of these discussions over how to get to zero carbon emissions, which is what scientists say is necessary if we're going to avoid some of the most catastrophic effects of climate change in the future. But electricity is not clean yet.

CHANG: Well, how much of it is already?

CHARLES: Across the country, about 60% is still coming from fossil fuels, coal, natural gas. That is changing, but slowly, and a lot of people say it's not fast enough. I took a reporting trip recently to North Carolina, sat down with one of the biggest electric utilities in the country, Duke Energy. Duke Energy is planning to shut down some coal plants, but it is mostly then planning to build natural gas plants instead. That does cut greenhouse emissions, but definitely does not get you to zero.

CHANG: Right. But we keep hearing about how, like, solar and wind energy are, like, the cheapest sources of energy. So why aren't utilities going all-renewable?

CHARLES: That was the question I asked Duke Energy, and the utility kept insisting that a big, fast shift right now to renewables would make electricity more expensive. Remember, up till now, most utilities have not had to include in their accounting any cost to the environment, just cost to the consumer. If they got hit by something like a carbon tax, suddenly, coal and natural gas would be way more expensive, and solar would look a lot cheaper. We don't have that now.

But there's another reason why utilities are not super excited about going all in. This is kind of a paradigm shift for utilities. It complicates their job because, remember, they can't control the wind and the sun the way they do coal and gas plants.

CHANG: Sure.

CHARLES: They can't just turn a switch and produce more of it when people need more.

CHANG: It's a big problem when the sun goes down, and then everybody starts turning on the lights. Then what do the utility companies do?

CHARLES: Right. So they could do some things. Like, when the sun is shining, charge up some humongous batteries so the power's there later when people need it. But also, instead of just managing the supply of electricity, maybe they could manage the demand for it. So for instance, they could control people's electric appliances. Say, a water heater - they could turn it on when there's plenty of electricity, when the sun is shining. Sun goes down - they turn it off again, matching the demand to the supply.

CHANG: Ah, like time shifting the demand for electricity.

CHARLES: Yeah, which is a technical challenge, but it also raises this other really big question. If I'm a traditional electric utility, how do I make money doing that?

CHANG: I mean, are they even allowed to make money doing something like that?

CHARLES: Well, that is a question. Remember, these are heavily regulated companies because they're often monopolies. And the regulations usually say an electric utility is required to provide reliable power at the lowest possible cost, period. That's it.

CHANG: Yeah.

CHARLES: But now they're saying, well, maybe we should come up with new rules that say, for instance, electric utilities can charge consumers not just for generating the power, but also for things like energy storage or time shifting demand for power, phasing out fossil fuel plants early. Basically, make it profitable to cut carbon emissions. They're starting to do that in places like New York or Minnesota, Colorado.

CHANG: So how expensive would this be? Do we have any idea?

CHARLES: Well, starting down this road is actually not expensive at all. Utilities are doing it already just because wind and solar is cheap. But things do get expensive, probably, when you get closer to zero carbon emissions, when you're relying on wind and solar not just for 50% or 60% of your electricity but 100% of it because you have to prepare for these rare events when you need a lot of renewable energy for a very long time. Think a really cold, long, cloudy winter when, you know, there's not much...

CHANG: No sun.

CHARLES: ...Not much sun and people are turning their electric heaters way up. To prepare for those real events, you would need to build a lot. That's when it could end up costing you real money. We don't know exactly how much that is yet.

CHANG: That is NPR's Dan Charles.

Thanks, Dan.

CHARLES: Nice to be here, Ailsa. Transcript provided by NPR, Copyright NPR.