Viacom-CBS merger is Shari Redstone’s victory

A version of this article first appeared in the “Reliable Sources” newsletter. You can sign up for free right here.

Edmund Lee’s lead on the front of the Business Day section in Wednesday’s NYT: “Shari Redstone got her wish.”

The reunion of CBS and Viacom — to be known as ViacomCBS — “is a victory for Ms. Redstone, the leader of a family business that has led the two media giants for two decades,” Lee wrote. She had “pushed for a deal for at least three years but faced fierce opposition from CBS’s board, including its former chief executive, Leslie Moonves.” This time last year Moonves was fighting to save his job amid a sexual misconduct scandal. By September he was out of the picture. Now Redstone will be chair of the combined company.

“My father once said ‘content is king,’ and never has that been more true than today,” Redstone said. Here is Frank Pallotta’s full story for CNN Business…

>> Bloomberg’s Christopher Palmeri: This deal “cements her status as most powerful woman in U.S. media…”

Will the companies benefit from this combo?

Shares in both CBS and Viacom were up on Tuesday, reflective of a wider rally, after slipping on Monday. But “Wall Street has questions about the combined company’s operating structure and next steps,” Variety’s Brian Steinberg reports. Analysts are “not convinced the current management structure, which puts CBS CEO Joe Ianniello in charge of CBS-branded assets and makes Viacom CEO Bob Bakish the head of the whole company, will allow for maximizing assets. And they want more information on expected results from using the combined company to boost revenue from streaming-video and new kinds of data-and-technology-enabled advertising,” he writes…

>> Barclays analyst Kannan Venkateshwar: The exec structure is “likely to create unnecessary day-to-day operating friction as the CBS and Viacom silos and reporting structures are likely to skew incentives towards maintaining status quo…”

Lowry’s take

Brian Lowry writes: The Viacom-CBS split didn’t make much sense at the time, coming across as a capricious maneuver by mogul Sumner Redstone, then justified through the argument that it would unlock additional value as two entities, “Via-Slow” (that is, steady old CBS) and “Via-Grow” (cable heavy Viacom). Now daughter Shari has engineered a reunification, but it comes at a very different time in the entertainment industry, one that suggests the newly merged entity is going to need another deal to play with the giants currently engaged in the streaming wars. Read on…

Buy or get bought?

The WSJ’s Lillian Rizzo and Joe Flint quote a “former top Viacom executive” saying “they still don’t have the scale required to compete with the bigger players.”

Option One: “Executives at the companies have contemplated the idea of mergers with cable programmers including Discovery and premium network Starz or its owner, Lions Gate Entertainment, people familiar with the situation say. Sony’s movie and TV unit, Hollywood studio MGM and AMC Networks are among other possible targets, industry executives and Wall Street analysts say.”

Option Two: “CBS and Viacom also could become a buyout target.” Michael Nathanson is quoted: “Amazon is lacking content library, sports-infrastructure capabilities and a consistent pipeline of new shows. To me, it makes sense — Amazon isn’t ‘all in’ on the video business yet.”

Notes and quotes

>> The WSJ and Bloomberg are out with tick-tocks about the dealmaking…

>> Bloomberg’s Lucas Shaw noted: “CBS and Viacom have a combined $28B in sales, far more than Netflix ($16B). CBS and Viacom are worth about $30B combined, or 22% of Netflix.”

>> Here are Tuesday’s internal memos…

>> Viacom CFO Wade Davis will be leaving, per Bakish’s memo…

Outstanding Q’s

>> ViacomCBS is a mouthful. What will be the go-to abbreviation?

>> ViacomCBS is targeting $500 million in cost savings. Is that really possible? How many jobs will be nixed?

>> Will there be any regulatory hiccups? Meg James notes that “the process that is expected to take several months. The companies said they expect the deal to be complete by year’s end.

>> Two of Steinberg’s Q’s: “If company is going to combine ad sales, who will oversee?” And “who will be point person in talks with cable and satellite” distributors?

FOR THE RECORD

— “GateHouse started making cuts this week at at least four papers,” Tom Jones reports… (Poynter)

— Fantastic story by Tiffany Hsu: “Ads Pitching CBD as a Cure-All Are Everywhere. Oversight Hasn’t Kept Up…” (NYT)

Read more of Tuesday’s “Reliable Sources” newsletter… And subscribe here to receive future editions in your inbox…

— Philip Bump writes about how Trump’s promotion of Jeffrey Epstein conspiracy theories has entered “gaslighting mode…” (WaPo)

— Speaking of Trump and conspiracy theories: Stephen Colbert’s Tuesday bit: Trump “doesn’t spread conspiracy theories, he just retweets conspiracy theories…” (Twitter)

A “new point of origin for our national story”

With race and racism at the center of America’s top stories right now, this New York Times project happens to be very well timed. It is called the 1619 Project — a major initiative about the history of slavery in the United States. Dean Baquet sang its praises and told me to Google it immediately when we spoke on Tuesday.

The NYT Magazine says that its goal with the project is to “deepen understanding of American history (and the American present) by proposing a new point of origin for our national story.” That new point of origin is August 1619, when the arrival of the first enslaved Africans “inaugurated a barbaric system of chattel slavery that would last for the next 250 years and form the basis for almost every aspect of American life.”

“In the days and weeks to come,” the magazine says, “we will publish essays demonstrating that nearly everything that has made America exceptional grew out of slavery.” This project takes up an entire issue of the magazine, plus an extra special section, this coming weekend…

The kickoff event

The NYT held an “evening of conversation and performance” to kick off the project on Tuesday. “1619 is as important to America as 1776,” staff writer Nikole Hannah-Jones said.

Hannah-Jones pitched this project back in February. She wrote on Twitter that she has been “obsessed with the year 1619 and how the start of slavery in America has shaped everything in our society.” And she was able to secure the NYT’s backing in a big way. At Tuesday night’s event — joined by Jamelle Bouie, Mary Elliot, Eve Ewing, Tyehimba Jess, Yusef Komunyakaa, Wesley Morris, Jake Silverstein and Linda Villarosa — Hannah-Jones said “this anniversary is the reason we even exist as a country.”

“We cannot change a society if we don’t acknowledge how we got here,” she said.

And she urged readers to check out the contributors page this weekend: “Trust me, you’ve never seen anything this black in the New York Times. The of black writers, black artists, black photographers, black poets…”

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