ViacomCBS Merger: 5 Key Questions in the Wake of the Deal

The deal is done, but in this era of entertainment titans, is the combined entity large enough to make an impact?
"Star Trek: Picard"
"Star Trek: Picard"
CBS All Access

After years of on-and-off discussions, the entertainment industry has found its newest corporate juggernaut in ViacomCBS Inc.

CBS and Viacom announced their agreement to merge on Tuesday, marking the end of Shari Redstone’s years-long mission to reunite the two companies, which her father, Sumner Redstone, split in 2006. The merger is one of several cases of major entertainment companies consolidating in recent years; Disney acquired 21st Century Fox earlier in the year, while AT&T acquired Time Warner Inc., which owns Warner Bros., HBO, and Turner, in 2018.

Although smaller than these behemoths, the CBS-Viacom merger should position the company to better compete with the other entertainment industry juggernauts. But as with all consolidations on such a large scale, potential layoffs and clashes in corporate culture could result in more than a few growing pains. Here are five of the most important questions from the merger:

1) What’s the next move for the assorted ViacomCBS streaming services?

Expansive content libraries and a strong streaming presence are essential components of every major entertainment company, and the merger means the company has the potential to capitalize on both of those things. Omnisciently popular franchises such as “South Park” and “Star Trek” will exist under the same corporate roof alongside Nickelodeon, BET, and MTV.

ViacomCBS now has control over several streaming services, such as CBS All Access, Pluto TV, and the Showtime streaming platform. Although it’s not unusual for entertainment conglomerates to operate multiple streaming services, none of ViacomCBS’s streaming offerings operate on the financial level of platforms such as Netflix or Hulu. CBS All Access has never figured out a way to adequately markets its incredible library offerings; Viacom has the same rich source of content and the same plight – if they ever figure out what to do with Comedy Central digitally, Netflix’s burgeoning comedy slate should run scared.

It’s unlikely that the company will consolidate all of its streaming services into a single entity — Disney recently announced it would instead offer a bundle of its subscription services for a discount — but ViacomCBS needs to find a succinct way to capitalize on owning multiple streaming platforms in the future.

2) Will ViacomCBS retain its NFL broadcasting contract?

CBS is one of several outlets that has a contract to broadcast NFL games; until 2022 they will pay around $1 billion per year for that lucrative honor. It’s very likely that with the advent of digital competitors interested in airing games that the NFL will ask for significantly more money when the negotiations for the next contract begin, and it has long been felt that without a merger with Viacom the financial strain would like have been too much for CBS to bear alone. Does the merged company give ViacomCBS the cash flow to put in a winning bid against the likes of NBC, ABC…and Facebook and YouTube? We’ll see.

3) Will there be layoffs?

“Cost-cutting” and “restructuring” are almost always corporate buzzspeak for layoffs, among other things. Deadline reported that ViacomCBS is anticipating $500 million in cost savings from the deal, and noted that the company now has employee overlap in administrative areas. The merger probably won’t have a widespread impact at CBS or Viacom’s various studios, but employees in roles such as human resources and accounting may have cause for concern. Facilities are also a big question for the future; given the easy $700 million CBS pocketed by selling its Television City property in L.A.’s Fairfax District does ViacomCBS really need both CBS Radford in Studio City and the Paramount lot in Hollywood?

4) Can the differences in corporate culture be resolved?

Back in 1999 when Viacom and CBS were getting reunited for the first time, the broadcaster’s reputation as “the classiest U.S. television network” was so important to the story that the New York Times put that honorific in the first sentence of an article about the deal.

Viacom, on the other hand, was and continues to be identified by the youthful iconoclast MTV and by Paramount. Despite the studio’s 1912 birthday, Viacom represents the younger side of the Redstone media empire compared to the “Tiffany Network,” where three-piece suits are still a uniform of choice. (Business casual dress was begrudgingly allowed just this summer.)

Despite having the same corporate parent in National Amusements, the divide was encouraged and both halves of the company were totally silo’d from each other. This extended up to the executive ranks, where the tit-for-tat over which side would run what when caused the potential merger to stutter time and time again. This all changed last year when CBS was rocked by the sexual misconduct allegations against its chairman and CEO, Les Moonves, who was ousted from the company in the fall.

Moonves’ ouster also meant the main roadblock for for Shari Redstone’s dreams of a reunified firm was gone. Some skepticism remained in CBS’s upper ranks, but the path to a merger became clearer after marriage objector Joe Ianniello, CBS’s acting CEO, did an about-face.

Viacom CEO and Redstone ally Bob Bakish was tapped to lead the merged company, while Ianniello’s role at ViacomCBS will reportedly be scaled-down to focus only on CBS-branded assets —  not Showtime or Simon & Schuster — signaling Viacom will indeed come first in this marriage.

5) How does this set up Paramount against studio competitors?

After the Walt Disney Company purchased 21st Century Fox, the unified company owns a whopping 40 percent of the global box office. With that kind of dominance, the Mouse House has set the agenda for Hollywood: Avengers-level tentpoles in theaters and everything else on streaming.

Where exactly ViacomCBS fits into this picture remains to be seen. CBS Films, distributor of mid-budget and niche movies like “Pavarotti” and “Scary Stories to Tell in the Dark,” turned its focus earlier this year to producing content for CBS All Access, while Paramount counts “Top Gun,” “Mission: Impossible,” and “Transformers” among its existing franchises.

Is it enough to get by – or enough to attract another buyer for the combined ViacomCBS entity with deep pockets? While the CBS and Viacom sibling rivalry went into extra innings, the rumor on the inside  – and, frankly, the hope – was the Amazon would come in and swoop up the company to acquire its depth of content that appeals to Middle America and get that demographic to finally sign up for Prime. It’s an acquisition that would change the landscape – again – and finally put ViacomCBS on the level of a combined Disney-Fox and AT&T-Time Warner.

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