Viacom-CBS Merger Struggles to Lure Investors

Shares of Viacom and CBS have stayed mostly flat over the past month.

Last month, Viacom and CBS announced their plans to merge after 14 years apart. Then this week, CNBC sat down with Viacom Chief Executive Bob Bakish, who will be CEO of the combined companies. 

During the interview, Bakish said he expected to see both company’s shares rally more than they have. Bakish said he’s spent weeks talking to investors and informing them of the opportunity the merger can provide.

Shares of Viacom and CBS went up slightly after both companies announced the pending merger. But the shares have mostly fallen flat over the past month. At the time of this writing, both companies’ shares are down around 1%. 

Here’s an overview of the pending merger and what you can expect from ViacomCBS going forward. 

Details About the Pending Merger

CBS and Viacom are both owned by the mass media holding company National Amusements, owned by Sumner Redstone. Viacom spun off from CBS in 2006, but Redstone’s daughter Shari, who serves as vice chair at both CBS and Viacom, has always wanted to put the two companies back together.

Shari Redstone’s goal is to create a media company that can compete with streaming companies like NBC, Netflix, and Apple. The two companies have spent over $13 billion to accelerate their streaming plans.

When the deal goes through, it will merge Viacom’s most popular channels with CBS’s broadcast network. Viacom currently owns MTV, Nickelodeon, and Comedy Central, and CBS owns the cable channel Showtime.

The current CEOs of Viacom and CBS signed deals renegotiating their contracts under ViacomCBS. Bakish will act as president and CEO of the new company while CBS Chief Executive Joe Ianniello will act as chairman of CBS. Ianniello will be in charge of all CBS assets after the merger and will report to Bakish. 

Once the deal goes through, existing CBS shareholders will own 61% of ViacomCBS. Viacom shareholders will own the remaining 39%. Bakish said he expects the merger to be finalized in December.

What Can You Expect From ViacomCBS?

There may be a lot of advantages to the Viacom and CBS merger. It will give both companies a stronger content lineup and allow them to compete with larger streaming services. Both companies attract a wide and varied audience. Viacom tends to attract a younger generation while CBS has an older audience demographic. 

But it’s still hard to imagine how ViacomCBS will compete with Netflix, Disney, or Apple. ViacomCBS will have a $30 billion market valuation — and that is impressive. But it still can’t come close to Netflix’s $137 billion valuation or Disney’s $247 billion valuation, for that matter. 

Plus, the content lineup just isn’t as strong compared to what current streaming services are offering. But the merger does have potential … the two companies will be stronger together than either would be on its own. 

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