CBS and Viacom are bringing their networks back together to form a new company.
The two media giants announced Tuesday that they have entered into an agreement to combine in an all-stock merger, creating a combined company with more than $28 billion in revenue.
The combined company will be called ViacomCBS Inc. The deal, which is subject to regulatory approvals, is expected to close by the end of the year, Viacom and CBS said in their announcement.
The two companies split in 2005, but today both face an evolving competitive landscape.
The merger could have repercussions for TV lovers, whether they have cut the cord or are wedded to traditional pay-TV systems.
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Viacom owns Paramount Pictures and pay TV channels such as Comedy Central, MTV and BET, while CBS has a broadcast network, television stations, Showtime and a stake in The CW over-the-air network.
CBS was one of the first media companies to launch its own streaming service, CBS All Access. The $6-a-month service now has a new “Star Trek” series, a revival of “The Twilight Zone” and archives of old and current broadcast shows. CBS says All Access and its Showtime streaming services have 8 million subscribers combined.
Analysts say the reunion will help both companies navigate an ever-competitive streaming landscape.
Viacom CEO Bob Bakish will become CEO of the combined company. Acting CBS CEO Joe Ianniello will become chairman and CEO of the CBS division. CBS shareholders will own about 61% of the combined company and Viacom shareholders will own 39%.
“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 a statement.
The combined company would still be small compared with Disney, which has a vast library of movies and shows, and Netflix, the pioneer in streaming technology.
CBS has a market value of $18 billion and Viacom has a market value of about $11.7 billion. Disney’s is nearly $245 billion and Netflix is at $136 billion.
Stephen Beck, managing partner of cg42, said merger or no merger, CBS and Viacom need to invest in content to get ahead.
“The streaming environment is approaching a level of saturation in which it won’t be realistic for consumers to subscribe to all or most of the platforms available to them,” Beck said. “Viewers will make hard choices about where their money will go, and the providers that thrive will be the ones that have the content people can’t go without.”
Contributing: Mike Snider, USA TODAY; Associated Press
Follow USA TODAY reporter Kelly Tyko on Twitter: @KellyTyko