Battle of the Redstones continues despite CBS Viacom merger

Sumner Redstone's granddaughter questioned the wisdom of the $25B merger, pointing to a decline in stock price since the deal was announced.
Shari Redstone, president of National Amusements and Vice Chairman, CBS and Viacom speaks at the WSJTECH live conference in Laguna Beach, California
Shari Redstone, president of National Amusements and Vice Chairman, CBS and Viacom.Mike Blake / Reuters file

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By Claire Atkinson

After a brutal three-year battle, Viacom and CBS are finally merging. The $25 billion media giant debuts Thursday on the Nasdaq exchange, under the tickers VIAC and VIACA.

Thirteen years after the two companies were first separated to unlock growth, ViacomCBS will house assets from the Paramount movie studio, TV networks such as CBS and Network 10 in Australia, as well as an online TV platform, Pluto TV.

However, not everyone in the Redstone family, which controls both companies, is applauding the deal. Ailing Viacom founder Sumner Redstone, now 96, turned over management to his daughter Shari in 2016. Running the combined two companies, Shari is now the most influential woman in TV.

But her niece, Keryn Redstone, a documentary producer, seems skeptical about the wisdom of a combined Viacom and CBS.

“This merger is going to be rough, at least the first year,” Keryn Redstone said in an interview.

ViacomCBS is expected to reduce its staff by 2,000 positions, according to a source familiar with the company's plans. The company has said it will find $500 million in cost savings as a result of the combination.

The stock prices of both companies have taken a beating since the merger was first announced in August. Industry observers have been expecting such a combination for years, but as negotiations dragged on, the finalization of the merger met with lukewarm market sentiment, though the stocks gained a little upward momentum on the final day of trading separately.

Next week, on Dec. 9, CEO Bob Bakish will try to gin up excitement around his vision for the combined company at an investor conference. In a news release on Wednesday evening, Bakish said: "This is a historic moment that brings together two iconic companies to form one of the world's most important content producers and providers."

But Keryn Redstone told NBC News she’s confused about who the combination is good for.

“There was a good reason why they split," she said. "The idea that combining them is going to create a better (company). I mean who is it better for? I don’t think it’s better for anyone."

She added: “The stock price is a reflection of people’s doubt about whether it’s good for the shareholders or not.”

Viacom’s market capitalization stood at $11.78 billion when the deal was announced. It has since sunk to $9.89 billion, while CBS has dropped from $18.25 billion to $15.3 billion, as of Wednesday's trading session.

Keryn Redstone said Viacom and CBS are simply late to the game when it comes to competing with tech giants and Walt Disney, and that ViacomCBS is now being forced to support its own streaming services without the catalog of programming it would need to become competitive in the red-hot market.

Some shareholders agree.

“They have to do something, and they will be doing something,” said Mario Gabelli, CEO of Gamco Investors and one of the biggest and longest-standing shareholders of CBS, Viacom, and National Amusements, the holding company owned by the Redstone family.

ViacomCBS will be forced to make additional investments, Gabelli said. He predicted a possible Sony/Paramount partnership, given the astronomical expense of investing in movie production.

The newly combined ViacomCBS will have a 22 percent market share of U.S. TV viewing, according to a company statement. While it is expecting to sell almost $8 billion of advertising, the growth of previous years won’t be there: TV advertising will decline 2 percent by the end of 2020, according to Group M, which analyzes ad trends.

A representative for Shari Redstone declined to comment on Keryn Redstone's comments, while a spokesman for ViacomCBS pointed to the company news release to counter naysayers.