CBS Corporation (NYSE: CBS) has confirmed it is in talks with Viacom, Inc. ( VIA, VIAB) to potentially reunite the two companies after they spit from each other back in 2006. The companies say they formed a joint exploratory committee to discuss a merger.
“There can be no assurance that this process will result in a transaction or on what terms any transaction may occur,” the companies say in a statement, adding that neither would comment further on a deal until it is finalized.
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A combined CBS-Viacom would be a force to be reckoned with in the media landscape, joining CBS’s television networks and CBS All Access streaming service with Viacom’s cable TV channels and movie studio.
A deal would also continue the theme of blockbuster mergers in the media market. In March, AT&T ( T) must defend its potential $85.4 billion union with Time Warner ( TWX) in court after the U.S. Justice Department sued to block the deal on antitrust grounds.
Media companies hoping to compete with the wildly successful over-the-top streaming model of Netflix ( NFLX) are aggressively looking to acquire more content. AT&T wants the Time Warner cable assets for its DirecTV Now streaming service. Walt Disney Co. ( DIS) recently acquired cable TV and movie assets from Twenty-First Century Fox ( FOXA) ahead of the planned 2019 launch of a Disney streaming service.
BTIG analyst Rich Greenfield says CBS is taking the same approach to try to give its CBS All Access, which currently costs $5.99 per month, a shot in the arm.
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“The problem with CBS All Access is the content is limited. CBS simply does not have enough content or enough scale” Greenfield says. “All of the content studios inside of Viacom would be a meaningful addition.”
Shari Redstone, daughter of media mogul Sumner Redstone, is reportedly orchestrating the merger talks between CBS and Viacom. The Redstone family controls both CBS and Viacom via investments through privately held National Amusements.
CBS said last year that it expected CBS All Access to reach 4 million subscribers by the end of 2017. Investors will likely get an update on All Access as well as more information on the Viacom merger talks when CBS reports its fourth-quarter earnings on Feb. 15.
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Where Does a Viacom, Inc., (VIA, VIAB) CBS Corporation Merger Fit In? originally appeared on usnews.com
