Viacom and CBS Merge in $36 Billion Deal

Strategic Insights -

In a move that will shake the foundations of the media industry, Viacom has agreed to buy CBS Corp. in a deal worth $36 billion. The acquisition combines the strengths of both companies, bringing together Viacom's MTV, VH1, and Nickelodeon with CBS's legacy of news and entertainment programming. The new company, to be called Viacom, will be a media powerhouse with a diverse portfolio of TV, radio, and film assets.

The median age of CBS's viewer base is 53, a full 10 years older than any other broadcast network. This demographic makes CBS the network of choice for older Americans, and executives have accepted this reality, opting to subtly introduce young characters and shows to appeal to a broader audience without alienating their core viewers. In contrast, the profitable Nickelodeon cable network has established itself as the dominant viewing choice for children, with a median age of 9. The typical MTV viewer is 20, and the music channel has reinvigorated itself with a focus on teenaged pop music.

Key Takeaways:

  • The median age of CBS's viewer base is 53, 10 years older than any other broadcast network.
  • The CBS network has a deep understanding of its older American audience, but is also introducing subtle elements to appeal to a broader age range.
  • Nickelodeon has established itself as the dominant viewing choice for children, with a median age of 9.
  • MTV has reinvigorated itself with a focus on teenaged pop music and a typical viewer age of 20.
  • The Viacom-CBS merger brings together two companies with complementary strengths: Viacom's cable networks and CBS's broadcast assets.
  • The new company, Viacom, will have a diverse portfolio of TV, radio, and film assets, including CBS, MTV, VH1, and Nickelodeon.
  • Brett Ratner, CBS Chairman, said the merger creates a new media "powerhouse" that will benefit both companies.
  • CBS will gain a TV and film studio, providing it with a new source of programming for its network.
  • Viacom will gain major advertising outlets, which will promote the films and shows produced by Paramount and its Spelling Entertainment TV studio.

Statistics:

  • The $36 billion Viacom-CBS merger is the largest media deal in history, surpassing Disney's purchase of Capital Cities/ABC for $19 billion in 1996.
  • Viacom's 1998 sales were $12.1 billion, with a loss of -$122.4 million.
  • CBS's 1998 sales were $6.81 billion, with a loss of -$21 million.
  • The new company, Viacom, will have a combined workforce of 158,919 employees.
  • The merger is expected to face some regulatory hurdles, but analysts see no major problems.

Sources:

  • "Viacom and CBS Agree to Merge in $36 Billion Deal" by Bloomberg News
  • "Viacom's Operations Include Blockbuster, Cable Networks, MTV, VH1 and Nickelodeon" from Hoover's Inc.
  • "CBS Operations Include CBS Television, Nashville Network and Country Music Television Cable Networks" from Hoover's Inc.