Combining TV programming like NCIS, The Daily Show and Billions under one company isn’t enough in 2019 to compete with other big media companies.
Moody’s Investors Service has placed CBS and Viacom debt ratings up for review, adding that it will likely downgrade the broadcaster’s overall credit rating while boosting that of Viacom’s.
Shares in Viacom and CBS both declined more than 8% Wednesday as investors absorbed the details of the companies’ long-awaited merger during a broader stock market retreat. CBS stock closed at $44.62, 8% lower, and Viacom at $26.72, down 8.5%.
Viacom CEO Bob Bakish will become CEO of the combined company, ViacomCBS. Acting CBS CEO Joe Ianniello will become chairman and CEO of the CBS division. The deal is an all-stock transaction. The companies say the combined company will have $28 billion in revenue.
CBS and Viacom are inching closer to a deal that would join the onetime siblings after a three-year dance. But whether the reunion will solve their problems or simply kick them down the road remains one of the media world’s biggest questions.
As media giants gird for battle with Netflix and Amazon, CBS and Viacom continue to pursue marginally more patient streaming strategies, gaining steady ground without spending their way into trouble. Now, as the companies prepare finally to consummate a merger that has been many years in the making, they stand to become a bulked-up media player with arguably the industry’s most diversified streaming portfolio.
Board members of CBS and Viacom worked most of the weekend in an effort to reach a long-awaited merger agreement for the two halves of the Redstone media empire. Sources close to the situation said the sides have made progress since Friday in hashing out some of the final details in the tie-up between the media conglomerates that are both controlled by the Redstone family’s National Amusements holding company. An agreement in principle could be announced as early as today.
CBS and Viacom reported earnings on Thursday — and refused to discuss what everyone wanted to know: the status of their merger plans. Despite the dearth of details, sources with direct knowledge of the deal said the merger could be announced within days. Holding up the process are negotiations over the exchange ratio, or the number of new shares that will be given to shareholders of a company that is being acquired — in this case, Viacom, they said.
With its anticipated re-coupling with CBS casting a shadow, Viacom reported third quarter earnings that beat Wall Street forecasts on Thursday. For the three months ending on June 30, the film and TV conglomerate reported revenue of $3.36 billion and an adjusted diluted earnings-per-share of $1.33. Media analysts had forecast earnings per share of $1.06 and $3.33 billion in revenue.
Investors and media observers are hoping that Viacom and CBS will offer some hint of their progress this week toward a merger when the media companies each report their second quarter earnings on Aug. 8.