It’s been practically 20 years since Viacom and CBS first introduced their intent to merge, in a $35 billion deal that was billed on the time as the most important ever in showbiz. When Viacom’s Sumner Redstone and then-CBS president and CEO Mel Karmazin revealed the plan at a Sept. 7, 1999, press convention, the mixed Viacom/CBS empire was valued at $80 billion.
That unique merger would finally solely final 5 years, as Redstone moved to separate Viacom and CBS again into separate firms in 2005 — maintaining his oversight over each, after all. However within the early days of the merger, the outlook was rosy. Redstone known as Viacom and CBS “pure companions.”
Redstone is now incapacitated, his empire within the arms of his daughter, Shari Redstone, who’s guiding CBS and Viacom again collectively. However even on the time of the unique merger, the query of the elder Redstone’s superior age — he was 76 — was a subject of concern, which is why a succession plan was mentioned. As a part of the unique plan, Redstone stored the chairman/CEO title over all of Viacom, with Karmazin in line as president and COO, and as Redstone’s eventual substitute. In fact, Karmazin was ultimately pushed out by Redstone. However on the time, Redstone mentioned, “I insisted (Mel) include the deal. The man is good. We’re kindred spirits.”
Mockingly, Viacom’s DNA has at all times come from CBS. The unique Viacom was first created within the 1970s after the Justice Division pressured CBS to unload its syndication unit. Initially only a distribution firm, Viacom started buying TV stations after which cable retailers (together with MTV and Nickelodeon in 1984). Then Redstone’s Nationwide Amusements took management of the corporate in 1986, and he started an acquisitions spree that included Paramount Communications in 1994 and Blockbuster Video, which included Spelling Leisure, in 1995.
The Viacom acquisition got here practically 5 years after Westinghouse paid $5.four billion for CBS in 1995. In buying CBS, Redstone touted the power to promote and cross-promote Paramount and Viacom content material throughout CBS’ TV and radio stations, in addition to out of doors billboards. The deal was seen as complimentary: CBS was principally in broadcast (each TV and radio), whereas Viacom’s strengths had been in movie and cable TV.
The CBS/Viacom merger was so massive on the time that Senate antitrust subcommittee chairman Mike DeWine (R-Ohio) known as the merger “somewhat scary.”
Among the many chief issues: That CBS/Viacom would personal two broadcast networks, as Viacom was concurrently shopping for out its 50/50 partnership with Chris-Craft to develop into sole proprietor of weblet UPN. Viacom threatened to close down UPN if it couldn’t maintain the small community within the merger, and regulators finally allowed the corporate to maintain it together with CBS.
As a result of it oversees broadcast licenses, the FCC was the ultimate step in blessing Viacom/CBS, which it did on Might 3, 2000. The primary actual check of the facility of the mixed firm got here quickly after, when “Survivor” premiered to beautiful rankings — and Redstone credited the merged firm’s elevated footprint for serving to promote the present. Talking quickly after the merger was made official, Redstone proclaimed that the combo of “our extremely complementary operations” would make “Viacom the preeminent success story of the media business for a lot of a long time to come back.”
Early examples of cross-company synergy that 12 months included TV Land airing a week-long marathon of traditional episodes of “The Fugitive” to advertise CBS’ revival of the franchise. VH1 was tapped to advertise the Eye’s new Bette Midler sitcom with every week of Midler-themed programming. CBS additionally introduced an MTV-produced Tremendous Bowl halftime present, a Nick Jr.-branded Saturday youngsters’ block, and TV film co-productions with Showtime.
“Inside our firm, by all kinds of various tentacles, we’re all working collectively in a splendid approach,” then-CBS head Leslie Moonves mentioned on the summer time 2000 TV Critics Affiliation press tour.
However it didn’t end up that approach. Bumps within the synergistic street included that 2004 Tremendous Bowl XXXVIII halftime present, produced for CBS by MTV. That occasion created an uproar after Justin Timberlake tore off a part of Janet Jackson’s garments on digital camera, visibly exhibiting her nipple for a quick second. The ensuing uproar included a file $550,000 high-quality for CBS by the FCC (though an appeals courtroom ultimately voided the charge) and past that led to a crackdown in on-air content material, spurred by spike in content material complaints and FCC fines throughout the board.
Within the company boardroom, the Viacom/CBS merger additionally led to extra govt intrigue, as Moonves continued to amass extra energy and Redstone quite shortly soured on Karmazin.
Karmazin, a brilliant salesman, had helped construct up the Infinity Broadcasting radio chain and, subsequently, CBS Corp. However after CBS merged with Viacom, this feisty entrepreneur had a tough time working with Redstone. After 4 years of bickering over how greatest to handle the mixed operations of Viacom and CBS, Karmazin ceded floor to Redstone. The 2 fought over Karmazin’s tight-fisted Wall Road-oriented fashion, and whether or not or not the corporate was making sufficient massive bets on future know-how or blockbuster films. As Karmazin departed, Redstone gave extra energy to Moonves and Viacom’s Tom Freston.
By 2005, Redstone had develop into pissed off by the colossus he had created. Viacom’s inventory efficiency was to not his liking and he noticed few if any transformative acquisition properties on the horizon. So he proposed breaking Viacom into two firms, housing film and cable-TV operations in an organization led by Freston and broadcast TV, radio and out of doors promoting operations below Moonves. Freston’s Viacom was purported to develop extra shortly with out being encumbered by the extra steady companies given to Moonves. Redstone, in essence, would oversee a development inventory and a worth inventory. “Generally, divorce is best than marriage,” Redstone quipped in an interview on the time.
After the breakup, nevertheless, CBS proved to be a gradual ship, whereas Viacom noticed its shares stagnate as the corporate struggled to determine find out how to regulate to the digital age — resulting in Redstone’s fast ouster of Freston in 2006. (On the time, a part of Redstone’s unhappiness got here from Viacom failing to accumulate MySpace, on the time the most well liked social media property on-line.) His substitute, Phillipe Dauman, managed a greater than 130% improve in Viacom shares, to nearly $88 a share in early 2014, solely to see the worth as its cable belongings continued to face viewership erosion.
In 2016, Dauman — who had been pursing a plan to promote practically half of the Paramount studio — misplaced an influence wrestle with Shari Redstone and was ousted himself. At CBS, Moonves, after all, was additionally ultimately thrown out, however for very completely different causes, when allegations of sexual assault pressured his exit in 2018.
Now, with CBS and Viacom about to resume their vows in any case that drama and all these years later, some traders could ponder whether the corporate ought to have caught it out below a single umbrella.