Viacom and CBS to Merge

Viacom Inc. (NASDAQ: VIAB) and CBS Corp. (NYSE: CBS)announced plans to work on a merger between the two media companies. Back in 2016, the possible merger was shut down due to controlling shareholders and concerns by CBS’ directors over financial and governance issues. CBS owns cable networks that include Showtime, CBS TV Network and CBS TV Studios while Viacom’s businesses include Nickelodeon, Paramount Pictures, Comedy Central, and MTV. Viacom would have more negotiating leverage with cable and satellite companies in the future.

“Scale matters now and is going to continue to matter in the future,” Shari Redstone told an audience at a luncheon at the Paley Center for Media in New York City last fall when asked about a potential CBS merger.

The merger would have a combined market value of more than $37 billion, which is way less than the most popular video streaming service, Netflix’s market capitalization of $113 billion. The partnership would face extreme pressure and challenges. Currently, Viacom’s stock has been trading around $33 a share which is below the $35 to $38.80 range it was trading back in 2016 when they initially began talks with CBS for a partnership. The company’s shares were last up 1.8% in afternoon trade while CBS shares were up 0.5%.

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