- CBS and sister company Viacom have agreed to merge in an all-stock deal that would create a combined company with around $28 billion in revenue, the companies announced on Tuesday afternoon.
- The feeling at Viacom, based on interviews with current and former employees, is relief that the long-awaited deal is done and anxiety around what comes next.
- While some employees in Viacom's ad sales and marketing teams are concerned about potential layoffs and upward mobility, other staffers felt that Viacom was emerging as a leader over CBS, which made them more confident in their job prospects.
- Viacom employees that Business Insider spoke with were also bracing for more deal activity, believing that a deal with Viacom was just one step in CBS' growth plans.
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CBS and Viacom have agreed to merge - after 13 years apart and two stalled merger attempts in recent years - bringing TV channels like MTV, VH1, Nickelodeon, Comedy Central, and BET under the same roof as CBS, Showtime, and CBS' sports and news networks, the companies announced on Tuesday afternoon. The proposed all-stock deal would create a combined company with roughly $28 billion in revenue, the companies said.
For employees at the two New York-based companies, especially longtime staffers who had been with CBS or Viacom since before the 2005 split that established the companies as separate entities, the tie-up brings to a close years of will-they-or-won't-they drama.
The feeling at Viacom internally, based on interviews with a half dozen current and former employees, is relief that the deal is finally done and anxiety around what comes next.
"There is much angst about more layoffs and consolidation, which must be frustrating since Viacom as a standalone business has been making some good progress," one former Viacom executive told Business Insider. "People in the sales and marketing jobs are worried about their upward mobility."
Is Viacom gaining the upper hand?
How individual Viacom staffers are responding to the merger depends largely on where they sit within the organization.
Layoffs are common in any merger, and recent tie-ups between media companies like Disney and Fox, and AT&T and WarnerMedia, have led to staff changes. While some teams at Viacom, such as the ad sales and marketing groups, and other staffers who work across Viacom's networks, are concerned about layoffs, others believe Viacom has the upper hand over CBS.
A CBS acquisition of Viacom was previously seen as better for Viacom than CBS, one former CBS employee said.
Viacom had been the weaker of the two companies in recent years because its large portfolio of cable-TV channels had struggled as more people abandoned traditional pay-TV bundles in the US.
But Viacom, which has been overhauling its TV networks to focus on fewer, more impactful brands, has started to show improvements. The company grew domestic advertising revenue for the first time in 20 quarters during its third quarter of 2019. Its deal this year to acquire ad-supported streaming-TV service Pluto TV, which has 18 million monthly active users, also helped boost ad revenue.
"They've actually got shows that are doing well on TV," one current Viacom employee said. "The Pluto thing was massive because it's TV viewing with commercials that's 18 to 34-[year-olds]."
One big question facing the ad sales team that could affect possible layoffs is whether Viacom's Sean Moran or CBS' Jo Ann Ross, who has experience selling around CBS' all-important NFL rights, will lead ad sales for the combined company.
But Viacom staffers were emboldened recently by another executive appointment. CBS' and Viacom's boards agreed that Viacom's Bob Bakish would be installed as CEO of the joint CBS-Viacom if a merger deal was reached, The Wall Street Journal reported.
The agreement to hand control of the combine company over to Bakish suggested that Viacom's international footprint would be a linchpin to future expansion.
"The idea that Bob could be leading does say a lot about Viacom's international strength," one current employee said. "It is why he rose to the top, I think."
It also gave Viacom staffers more confidence in their job prospects.
"The underlying feeling was if it Bob Bakish was to stay in power then it would be a good thing for everyone at Viacom," one former Viacom employee said.
Staffers are already bracing for more deal-making
Despite job concerns, some Viacom employees feel that the company is stronger with CBS in its corner.
Deals are happening across the US media landscape and it was only a matter of time before Viacom was scooped up, one former employee said. A worry among Viacom staffers was that the company, alone, could be broken up and sold in parts to media companies that wouldn't have common investors or aims, as CBS and Viacom do, leaving employees there with even less certainty.
Now that a marriage between CBS and Viacom is officially on the way, Viacom employees are bracing themselves for the next wave of merger activity.
"The main reason to bring CBS and Viacom together could also be to make a new, more attractive package for the next round of acquisitions," one current Viacom employee said. "Whether Viacom is a $12 billion company alone or $30 billion company with CBS, either version is dwarfed by AT&T, Comcast, Disney, Netflix ... If anyone is concerned, it's let's get passed this, and see what new assets we have that we can work with."
CNBC reported earlier this year that CBS was open to buying other companies in addition to Viacom, such as Discovery Communications, Sony Pictures, or MGM. CBS also had in informal talks with Lionsgate to acquire Starz, Reuters reported in May.
The company is trying to grow quickly so it can better compete for future NFL rights against deep-pocketed companies like Amazon, the CNBC report said.
CBS also has two streaming-video subscription services, CBS All Access and Showtime, which it might look to grow with assets from Starz or another company.
Already, there could be opportunities to put programming from Viacom networks such as Comedy Central, MTV, or Nickelodeon, or the studio Paramount TV, on those streaming services - shaking up Viacom's distribution strategies. CBS said last week that it would bring original and licensed kids programming into CBS All Access later this year, one sign that the company is experimenting with expanding the audience for the service.
At the network level, one current and one former Viacom employee that Business Insider spoke to pointed out that the company was recently reorganized, bringing MTV, VH1, CMT, and Logo under the leadership of Chris McCarthy; and Comedy Central, Paramount Network, and TV Land under Kent Alterman. Those networks were seen as lean already - some, like CMT, had layoffs in recent months and years- and the staffers didn't anticipate major cuts unless Viacom was willing to lose some aspects of production or development.
Business Insider did not speak to current employees at BET or Nickelodeon.
The wait-and-see approach
Ahead of the merger announcement, multiple employees at Viacom said they weren't concerning themselves too much with the deal talks until a combination was officially announced. Some employees that Business Insider reached out to for this story also said they had not been following the news much, and that the merger hadn't come up in conversations they were privy to at work.
One current executive said any staff changes on the ad sales side probably wouldn't come until the 2020 Upfront season was over, which would give employees time to find new jobs if there were layoffs.
These staffers were generally learning of developments in the CBS-Viacom deal alongside the rest of the world, through media reports, they said.
CBS and Viacom did not immediately respond to Business Insider's request for comment.
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