Split of CBS Corporation and Viacom

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Viacom logo before the split Viacom-old.svg
Viacom logo before the split
CBS Corporation logo after split CBS Corporation logo.svg
CBS Corporation logo after split
Viacom logo after split Viacom logo.svg
Viacom logo after split

On December 31, 2005, American mass media company Viacom split into two companies: the second CBS Corporation, its successor (the first being a short lived rename of Westinghouse Electric) which holds the namesake flagship channel Columbia Broadcasting System, CBS News, CBS Sports, Showtime Networks, UPN (Replaced by the CW, co-owned by TimeWarner), Smithsonian Channel, Channel 10, PopTV, Simon and Schuster, Infinity Broadcasting Corporation, Viacom Outdoor, Showtime Networks, and Paramount Television, and an entirely new Viacom which holds Paramount Pictures, Nickelodeon, Nick Jr., Noggin, Nicktoons, TEENick, Music Television, Black Entertainment Television, Video Hits One, Country Music Television, and later DreamWorks, respectively. It was first announced in March 2005. The companies are controlled under National Amusements' control because of a stagnating stock price. [1]

Contents

They would later re-merge into ViacomCBS, later Paramount Global.

Background

The evolution of Paramount
Paramount Global Logo.svg
1886 Westinghouse Electric Corporation is founded
1912 Famous Players Film Company is founded
1913Lasky Feature Play Company is founded
1914 Paramount Pictures is founded
1916Famous Players and Lasky merge as Famous Players–Lasky and acquire Paramount
1927 CBS is founded; Famous Players–Lasky assumes Paramount's name
1929Paramount buys 49% of CBS
1932Paramount sells back shares of CBS
1934Michigan Bumper Corporation is founded
1950 Desilu is founded and CBS distributes its television programs
1952CBS creates the CBS Television Film Sales division
1955Michigan Bumper Corporation renamed to Michigan Plating and Stamping Company
1958CBS Television Film Sales renamed to CBS Films; Michigan Plating and Stamping Company renamed to Gulf+Western
1966Gulf+Western buys Paramount
1968Gulf+Western acquires Desilu and renames it Paramount Television; CBS Films renamed to CBS Enterprises
1970CBS Enterprises renamed to Viacom
1971Viacom is spun off from CBS
1987 National Amusements buys Viacom
1989Gulf+Western renamed to Paramount Communications
1994Viacom acquires Paramount Communications
1995Westinghouse buys CBS
1997Westinghouse renamed to CBS Corporation
2000Viacom buys CBS Corporation
2005 Viacom splits into second CBS Corporation and Viacom
2019 CBS Corporation and Viacom re-merge as ViacomCBS
2022ViacomCBS renamed to Paramount Global

In 1952, CBS formed CBS Television Film Sales, a division which handled syndication rights for CBS's library of network-owned television series. This division was renamed CBS Films in 1958, again renamed CBS Enterprises in January 1968, and finally renamed Viacom (an acronym of Video and Audio Communications) in 1970. In 1971, this syndication division was spun off amid new FCC rules forbidding television networks from owning syndication companies (these rules were eventually abolished completely in 1993). [2] In 1985, Viacom purchased MTV Networks and Showtime/The Movie Channel Inc. from Warner Communications and American Express. [3] In 1987, Viacom was acquired by theater operator company National Amusements. [4] In 1999, Viacom made its biggest acquisition to date by announcing plans to merge with its former parent CBS Corporation (the renamed Westinghouse Electric Corporation, which had merged with CBS in 1995). The merger was completed in 2000, resulting in CBS reuniting with its former syndication division.

Split

After the departure of Mel Karmazin in 2004, [5] Sumner Redstone, who served as chairman and chief executive officer, decided to split the offices of president and chief operating officer between Moonves and Freston. [5] Redstone was set to retire in the near future, and a split was seen as a creative solution to the matter of replacing him. [5] It was also intended to provide alternative investments that would be more appealing to investors: one a high cash flow, lower growth company that could afford to pay a substantial dividend and the other a growing company that would have greater investment opportunities and therefore would not be expected to pay a dividend.

In March 2005, Viacom contemplated splitting the company into two publicly traded companies, amid issues of the stock price stagnating and clashing corporate cultures between the cable and broadcast divisions, which came to a head with the Super Bowl XXXVIII halftime show controversy a year previous with the MTV-produced show causing controversy for game broadcaster CBS.

On June 14, 2005, the Viacom board of directors approved the split of the company into two firms. [6] The CBS Corporation name would be revived for one of the companies, to be headed by longtime television executive (and Viacom co-president) Les Moonves, and would include the namesake television network CBS, UPN, Infinity Broadcasting Corporation, Viacom Outdoor, Showtime Networks, and Paramount Television.

The split was structured such that the second Viacom was spun off from the first Viacom, which was renamed CBS Corporation. In a sense, this was a repeat of the 1971 spin-off. However, in this case, CBS retained virtually all of the prior firm's broadcast television assets, including its various syndication companies.

CBS said: "In many ways, today's decision is a natural extension of the path we laid out in creating Viacom," Redstone said in a company-wide memo. "We are retaining the significant advantages we captured in the Paramount and CBS mergers and, at the same time, recognizing the need to adapt to a changing competitive environment." [7]

With the split, the two companies began trading on the New York Stock Exchange (NYSE) on January 3, 2006. Investors anticipated Viacom benefiting from the split, but instead, it dropped approximately 20 percent, while CBS Corporation rose 9 percent, that same year, Paramount Parks became a wholly-owned theme park unit of CBS Corporation. [8]

The second Viacom was created by Redstone and headed by Freston. It consisted of BET Networks, MTV Networks, and Paramount Pictures. [9] It started trading on January 3, 2006. [10]

Despite the split, both companies are controlled by National Amusements.

Re-merge

On August 13, 2019, CBS and Viacom officially announced their merger; the combined company was to be named ViacomCBS, with Shari Redstone serving as chair. [11] [12] [13] Upon the merger agreement, Viacom and CBS jointly announced that the transaction is expected to close by the end of 2019, pending regulatory and shareholder approvals. [13] The merger required approval by the Federal Trade Commission (FTC).

[13]

On October 28, 2019, the merger was approved by National Amusements, which then announced the deal would close in early December; the recombined company trades its shares on Nasdaq under the symbols "VIAC" and "VIACA" after CBS Corporation delisted its shares on the New York Stock Exchange (NYSE). [14] [15]

Assets moved to CBS Corporation

Assets moved to Viacom

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References

  1. ↑ Teather, David (2005-11-02). "Two-speed Viacom growth rates justify split". The Guardian. ISSN   0261-3077 . Retrieved 2023-11-16.
  2. ↑ D. Croteau; W. Hoynes (2006). The Business of Media: Corporate Media and the Public Interest. Thousand Oaks, California: Pine Forge Press. pp. 100–101.
  3. ↑ Fabrikant, Geraldine (September 17, 1986). "Viacom Chief Leads Group's Buyout Bid". The New York Times. ISSN   0362-4331. Archived from the original on January 30, 2021. Retrieved January 23, 2021. In November 1985, Viacom acquired MTV for $326 million in cash and warrants. One-third of MTV was publicly owned; the rest was owned by Warner Communications and the American Express Company. At the same time, Viacom bought 50 percent of Showtime, the pay television service, that it did not already own for $184 million.
  4. ↑ "Viacom Inc. has acquired Viacom International Inc". Los Angeles Times . 1987-06-10. Archived from the original on June 15, 2023. Retrieved 2023-06-15.
  5. 1 2 3 "Karmazin out at Viacom; Redstone plans departure – Jun. 1, 2004". money.cnn.com. Retrieved 2019-04-30.
  6. ↑ Fabrikant, Geraldine (June 15, 2005). "viacom board agrees to split of company". The New York Times . Retrieved July 28, 2014.
  7. ↑ "Viacom Makes Split Official - CBS News". CBS News . 2005-06-14. Retrieved 2024-04-16.
  8. ↑ Fabrikant, Geraldine (July 22, 2006). "a surprise after the split: Viacom struggles as CBS holds its own". The New York Times. Retrieved July 28, 2014.
  9. ↑ Hill, Charles; Jones, Gareth (2007-10-22). Strategic Management: An Integrated Approach. Cengage Learning. ISBN   978-0618894697.
  10. ↑ Alfano, Sean (January 3, 2006). "CBS, Viacom Formally Split". CBS News. Archived from the original on March 10, 2014. Retrieved March 5, 2023.
  11. ↑ Gasparino, Charles; Moynihan, Lydia (August 13, 2019). "CBS, Viacom agree to merge, forming a $28B entertainment firm". Fox Business. Archived from the original on March 11, 2021. Retrieved August 13, 2019.
  12. ↑ Szalai, George; Bond, Paul; Vlessing, Etan (August 13, 2019). "CBS, Viacom Strike Deal to Recombine". The Hollywood Reporter . Archived from the original on February 16, 2022. Retrieved February 16, 2022.
  13. 1 2 3 "CBS and Viacom To Combine" (PDF). CBS. August 12, 2019. Archived from the original (PDF) on August 13, 2019. Retrieved December 1, 2019.
  14. ↑ Steinberg, Brian (October 28, 2019). "Viacom, CBS Set to Merge in Early December". Variety . Archived from the original on October 28, 2019. Retrieved October 28, 2019.
  15. ↑ Weprin, Alex (October 29, 2019). "Viacom-CBS Merger Now Expected to Close in 'Early December'". Billboard . Retrieved October 29, 2019.
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