Viacom takeover of CBS forms $80bn media giant

VIACOM, the giant United States entertainment company, is to buy CBS, the leading US television network, for pounds 22bn in the largest ever media deal.

The tie-up, announced yesterday, is the latest stage in a massive consolidation of the US television, cable and media sectors. The consolidation has been driven by the convergence of new technologies, regulatory shifts in Washington and the booming US stock market.

Sumner Redstone, 76, the Viacom chairman, will be chairman and chief executive of the new company, which will retain the Viacom name. Mel Karmazin, 56, the CBS president, will be president and chief operating officer, and is seen as heir apparent to Mr Redstone.

Under the terms of the deal, CBS shareholders will receive 1.085 shares of Viacom's class B stock. The deal will create a media grouping with an enterprise value of $80bn, the two companies said. The tie-up is the latest in a series of deals that have reconfigured the media scene in America. Walt Disney Co bought Capital Cities/ABC in 1996 for pounds 12bn; Time Warner picked up the empire of CNN owner Ted Turner, and earlier this year, telecoms giant AT&T bought TCI, the cable operator.

NBC, the other major US network, is now the only one without a linkup, and there are widespread rumours that it, too, is on the verge of one. NBC is owned by General Electric.

It is shifts in regulation, above all, that have forced the pace for these massive deals. Viacom was originally spun off from CBS in the 1970s to comply with rules that networks could not own their own programming - rules that have subsequently been repealed. The Federal Communications Commission (FCC) ruled last month that companies could own more than one television station in a city, which sparked discussions between the two groups.

The merged company will have to divest some of its TV stations to meet FCC ownership caps, and Viacom's interest in UPN may have to be sold off since no company can own more than one network.

The merged company will have MTV, Nickelodeon and a host of other cable and pay-TV channels. It will also be the largest TV broadcaster in the US with stations in each of the top 10 markets and in 18 of the top 20 markets, including duopolies in Philadelphia, Boston and Dallas. It will have a strong TV production and syndication operation. "The new company will be greater than the sum of those impressive parts," said Mr Karmazin. "It will be, in a very real sense, the first media company truly positioned for the 21st century."

By linking the veteran network with MTV, the deal also gives CBS greater access to youth and youth programming, a hotly-sought commodity which CBS was perceived to be missing. Combined, the two companies would have annual sales of pounds 13 and an operating cash flow of around pounds 3bn.

Mr Karmazin and Mr Redstone said yesterday the new company will accelerate expansion abroad. In the UK, Viacom could target the market for new cable TV channels and look to build market share in outdoor display advertising.

the new Viacom





Country Music TV

Nashville Network

Paramount Comedy Channel

The Movie Channel


Paramount Pictures

Paramount Television

Spelling Television

King World Productions*


Simon & Schuster




Infinity Networks (US ad group)

Blockbuster Video

Theme Parks

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific