The worst-kept secret in the media business is official: Viacom and CBS Corp. are merging again with Shari Redstone becoming chair of the combined entity. But will shareholder litigation get in the way?
Upon the announcement, Mario Gabelli, the biggest independent holder of voting stock in the two companies, wasn't happy. He tweeted, "Breach of Fiduciary duties.........lawyers at work."
The history of CBS/Viacom is, in many ways, a tale of corporate and media law.
Viacom exists, in the first place, because the FCC came out with rules in 1970 that forbid television networks from holding interest in companies that produced or syndicated content. Those fin-syn rules caused CBS to spin-off Viacom even if Sumner Redstone eventually regained control in a proxy fight. The relaxation of fin-syn rules in the 1980s, and eventual repeal in the early 1990s, eventually resulted in a Viacom/CBS reunion in 1999. The "Humpty-Dumpty" merger, as The New York Times put it at the time, had some complications as Viacom had amassed its own local station holdings remember UPN? and thus the '99 merger had to negotiate the FCC's then-35 percent cap on national television ownership.
Redstone managed his way past that tangle even if he did have to appear before Congress to testify about media competition and consolidation. But the reunion would only last a few years. In 2006, the companies decided to split again.
It wasn't therapists intervening to cause the divorcees to re-explore their love for one another. Instead, Shari Redstone's ascendency and an unquenchable need for "scale" in the digital era has caused yet another reunion in this on-again, off-again, on-again relationship.
This time, thanks to the rise of digital giants like Netflix and Amazon and the perception that Viacom and CBS are stewards of a struggling legacy operation in the entertainment business, regulators aren't expected by analysts to pose much of an issue.
Instead, if there's any hiccups at all, it could be from shareholders.
The Redstones control CBS and Viacom through National Amusements, Inc., and it's a dual-class voting structure that has largely allowed the family ultimate power even if public stockholders hold 90% of CBS's equity. Nevertheless, Redstone has fiduciary duties to all shareholders of CBS and Viacom.
For months, Gabelli has been cold and hot about a deal.
Last year, he told CNBC that the companies should remain separate for now with the opinion that CBS was a "loaded laggard" and Viacom a "doubly loaded laggard." But just two weeks ago, he apparently changed his mind with his view that the merger has “got to” happen and “should come together for scale.”
But maybe the details count.
On Twitter, he raises the issue of "appraisal rights for voting shares," which basically is code for how a corporation's minority shareholder has the right for an independent valuation of stock price for repurchased shares.
If he files suit, it's likely coming in Delaware Chancery Court and may include some of the back story behind the merger including the Redstones' successful battle against Leslie Moonves over control of CBS.
In the meantime, CBS and Viacom tout synergies with analysts weighing in about why this time, it's different. All the king's horses and all the king's men gathered to put Humpty back together again.
Ending years of fitful discussions that played out against a backdrop of operatic corporate drama and media industry consolidation, CBS and Viacom have finally agreed to merge. The deal reunites them and pools assets such as Paramount Pictures, CBS, Showtime and MTV in an entity to be called ViacomCBS after 13 years of the two operating in separate media domains.
Under the all-stock deal, Viacom shareholders will get 0.59625 CBS shares for each non-voting share they own, which is an exchange ratio a bit below Viacom’s closing price last Friday.
Bob Bakish, who has guided Viacom’s progress since taking over as CEO in 2016, will lead the combined entity as president and CEO. Joe Ianniello, interim CEO of CBS since September 2018, will stay on as Chairman and CEO of CBS, overseeing all CBS assets.
Christina Spade, who had been CFO of CBS since last fall, will be EVP and Chief Financial Officer; and Christa D'Alimonte as EVP, General Counsel and Secretary.
The new company’s board of directors will have 13 members: six independent members from CBS, four independent members from Viacom, the President and CEO of ViacomCBS and two National Amusements designees. Shari Redstone, head of NAI, will be chair.
For Redstone, the deal is a vindication of her instinct to reunite the companies and comes after a lengthy period of difficulty at each company and with her father, Sumner Redstone, who is now 96. She occupies a rare position of power and equity ownership for a woman in the entertainment industry. “I am really excited to see these two great companies come together so that they can realize the incredible power of their combined assets,” she said in the official announcement. “My father once said 'content is king,' and never has that been more true than today. 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. Led by a talented leadership team that is excited by the future, ViacomCBS's success will be underpinned by a commitment to strong values and a culture that empowers our exceptional people at all levels of the organization.”
“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. “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.”
Ianniello said the merger “brings an exciting 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. I look forward to all we will do together as we build on our ongoing success. And personally, I am pleased to remain focused on CBS's top priority — continuing our transformation into a global, multiplatform, premium content company.”
The transaction combines assets of the 92-year-old CBS, including its flagship broadcast network, local TV stations, premium network Showtime and publishing house Simon & Schuster, with Viacom’s Paramount Pictures, MTV and Nickelodeon. As the streaming wars intensify between traditional media and tech giants Netflix and Amazon, the combined CBS-Viacom offers a notable mix of subscription and advertising-supported streaming services. CBS launched CBS All Access and Showtime’s over-the-top OTT platforms in 2015. Earlier this year, Viacom acquired Pluto TV, a leading ad-supported VOD service.
The drumbeat had been getting louder for a merger in recent weeks, and the conditions for an amicable arrangement have grown more favorable. The boards of both companies held talks through last weekend in a final push. Fresh perspective may have helped: Most members of the CBS board joined as directors in the past year as the company looked to reset its culture and direction in the wake of former CEO Les Moonves’ ouster. The longtime mogul left under a dark cloud after allegations of sexual assault and harassment by more than a dozen women.
The two companies have held three rounds of formal merger talks in recent years, but the last two efforts ran aground because Moonves objected to the management structure and other issues. Tensions had grown so much between Moonves and Shari Redstone over the control of the company by National Amusements and NAI’s efforts to, in his view, force a stronger company to be tied to a weaker one, boiled over in the spring of 2018. CBS sued NAI, which responded with a lawsuit of its own. The case resulted in a settlement at the time of Moonves’ exit that banned NAI from initiating deal talks but did not prevent the individual companies from doing so.
CBS and Viacom split in 2006, under the theory that more value would be unlocked by “freeing” Viacom from the then-sluggish, broadcast-heavy CBS shares. The roles soon reversed, however, with CBS riding its top-rated broadcast network, surging Showtime and growing digital portfolio to become the better-performing of the two stocks. Viacom’s cable-heavy set of assets, which minted money from the 1980s to the 2000s, began to hit turbulence this decade. Streaming, YouTube and social media carved into linear viewing of its once-invincible networks, hurting ad sales. Bakish’s predecessor, Philippe Dauman, took an extremely hard line with pay-TV operators, alienating many and jeopardizing distribution revenue.
The companies’ 96-year-old chairman emeritus, Sumner Redstone, who once ran National Amusements with an iron hand, was succeeded by his daughter, Shari, several years ago and has been in poor health. Shari Redstone spoke out early and often in favor of bringing the companies back together and has also pursued talks with other companies who could, in turn, roll up a combined Viacom and CBS. That may well still be the plan, according to insiders, and rollups of smaller independents such as Lionsgate or MGM also are possibilities.
In the short term, the focus will be on integration and financial efficiencies. Wall Street analysts have forecast about $500 million in cost savings from the deal, which is notably less than mega-deals like Disney-Fox and AT&T-Time Warner. Accordingly, the CBS-Viacom combination won’t likely result in deep job cuts, though there is overlap in many administrative areas.
Paramount Pictures chairman and CEO Jim Gianopulos has signed a new multiyear contract that will keep him atop the studio as parent company Viacom prepares to merge with CBS.
The veteran executive shared the news with his staff on Monday, sources tell The Hollywood Reporter. Paramount president of production Elizabeth Raposo has also re-upped.
In advance of the expected merger, Viacom and CBS Corp. have agreed on a management structure in which Viacom chief Bob Bakish — Gianopulos' boss — will be named CEO; CBS chief Joe Ianniello will take a top role overseeing the CBS brands; and Christina Spade will be named CFO, if a deal is reached.
The CBS-Viacom remarriage shouldn't have a dramatic impact on Gianopulos' film studio, since CBS is firmly in the television business. When the two media giants split in 2006, former CBS honcho Les Moonves launched CBS Films, a small label focusing on mid-range and specialty fare. CBS Films has been in the process of winding down for months.
The widely respected Gianopulos, who previously served a long stint as chairman of 20th Century Fox, arrived at Paramount in 2017. He was tasked with the difficult job of turning around the ailing film studio, whose fortunes had faded.
Righting a major Hollywood studio is often compared to turning around an aircraft carrier. Gianopulos has made progress with films including A Quiet Place and Rocket Man, while relaunching the Terminator franchise and rebooting the marquee Transformers series with Bumblebee. He's also unearthing Top Gun. Starring Tom Cruise, Top Gun: Maverick is set to hit theaters June 26, 2020, and is considered one of the most anticipated movies of the coming year.
There's also a potential new franchise in Dora and the Lost City of Gold, based on the beloved kids TV series that airs on sister company Nickelodeon. Dora opened to a subdued $17 million at the domestic box office over the weekend.
Gianopulos has strong talent relationships from his years at Fox, including with James Cameron, who is producing the upcoming Terminator: Dark Fate due out Nov. 1, and Ang Lee, who is directing the upcoming Will Smith sci-fi action pic Gemini Man Oct. 11. David Ellison's Skydance Media is Paramount's partner on both event pics, as well as on Mission: Impossible and Top Gun.
Viacom has scored a big, fat hairy deal to acquire the rights to classic cartoon Garfield. The media group has entered a “definitive agreement” to acquire the IP from owners Paws and will develop a new Garfield animated series.
The deal, which is expected to close in the coming weeks, will add to Nickelodeon's library of big names including Teenage Mutant Ninja Turtles, SpongeBob SquarePants and Paw Patrol.
In addition to the new animated series — the first since The Garfield Show aired on Cartoon Network in the U.S. in 2009 — Viacom will manage the global merchandising rights to the property.
Garfield creator Jim Davis will continue to produce the Garfield syndicated comic strip as he has done since creating the lazy feline since 1976. The cartoon has chronicled the life of the eponymous cat, his owner Jon Arbuckle and Odie the dog, as well as various friends. Known for his love of lasagne and coffee and his disdain for Mondays, Garfield has spawned a slew of movies and TV shows and has received four Emmy Awards for Outstanding Animated Program.
Nickelodeon's President Brian Robbins said, “This acquisition marks another step in our evolution toward being kids' first stop for the best new content and characters, so we're incredibly happy to have Garfield join our growing roster of globally loved franchises and to introduce this cool cat to a new generation of fans.”
“Great content is core to the strength of our brands, and Garfield is a beloved character that continues to be part of the cultural zeitgeist with universal resonance across all ages,” said Sarah Levy, Chief Operating Officer of Viacom Media Networks. “The acquisition of Paws provides another opportunity for Viacom to leverage our platforms to extend the global reach of iconic IP.”
Davis added, “I've always tried to make people laugh with humor that is classic and appealing to both kids and adults. I'm delighted that Garfield is going to be placed in the capable hands of the folks at Nick. They know how to entertain and will be great stewards for the franchise. I am also excited to continue to do the thing that gets me out of bed every morning...the comic strip.”
strong>EXCLUSIVE: Thomas Sadoski is staying at CBS. Less than three months after the network canceled praised family comedy series Life in Pieces after four seasons, one of its stars, Thomas Sadoski, has been tapped for a series-regular role opposite Edie Falco in the network’s upcoming midseason drama series Tommy in a recasting.
Sadoski will play the charming, seductive and morally complex second-term mayor of Los Angeles, who appoints Tommy Falco as the first female police chief in the city’s history, only to wonder what he’s gotten himself into. He takes over the role played by David Fierro in the pilot.
em>Tommy, from the Bull team of co-creator Paul Attanasio and producer Amblin TV, stars Falco as Abigail “Tommy” Thomas, a former high-ranking NYPD officer who becomes the first female Chief of Police for Los Angeles. She uses her unflinching honesty and hardball tactics to navigate the social, political and national-security issues that converge with enforcing the law.
The series-regular cast also includes Michael Chernus, Adelaide Clemens, Russell G. Jones, Olivia Lucy Phillip, and Joseph Lyle Taylor.
Attanasio executive produces with Darryl Frank and Justin Falvey of Amblin TV.
This marks a return to drama for Sadoski, who most recently starred as Matt Short on Life in Pieces. He previously was a series regular on HBO’s The Newsroom and NBC’s The Slap and has appeared on Broadway in Neil LaBute's reasons to be pretty, Other Desert Cities, The House of Blue Leaves and Reckless.
Sadoski, who was just cast in Broadway’s upcoming Grand Horizons alongside Michael Urie, Ashley Park, Maulik Pancholy and Priscilla Lopez, is repped by UTA and Industry Entertainment.
BS and Viacom appear to have settled the question of who will run the combined entity when the Great Reunion finally occurs, perhaps as soon as next Thursday.
Bob Bakish, currently CEO of Viacom, is in line to head the merged company, sources familiar with the proposed structure tell Deadline. Joe Ianniello, who has been acting CEO of CBS, will continue to run the CBS assets.
Sources close the situation tell Deadline that the new planned management structure is an effort to “draw from our strongest strengths.” They also note that the org chart is still in pencil, pending final negotiations.
Both CBS and Viacom are scheduled to report quarterly earnings next Thursday. The boards of the companies have circled that date as when they could formalize a deal. The exchange ratio - how many shares of CBS and Viacom will be traded to create the new entity.
The installation of Bakish, interestingly, comes just a year after former CBS bos Les Moonves went to legal war with Shari Redstone, head of CBS and Viacom controlling shareholder National Amusements, over a previous scheme to have Bakish in a key role. Moonves, who was ousted last fall after multiple allegations of sexual misconduct from a dozen women, always insisted on Ianniello as No. 2, the same slot he is now slated to occupy.
hristina Spade, who was appointed CFO of CBS last year amid a widespread restructuring, is set to take on the same role for the new entity.
Many more pieces will need to fall in place, along with the financial terms of the deal. Management of the many business units is still coming into focus. A different corporate source said “it isn’t August 8 we’re concerned about; it’s Aug. 9” when the two companies effectively become one and the blending begins.
The Wall Street Journal had the first report on the management agreement.