September 23, 2019

September 20, 2019

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CBS and Viacom Get Back Together to Serve Largest Share of U.S. TV Market

Apparently celebrity breakups and reunions happen at the corporate level, too. CBS Corp. is buying Viacom in an all-stock transaction that values Viacom at its current stock market capitalization of around $12 billion. This is the second time around for these media giants. The first came in September 1999 and lasted for five years. Viacom was originally created in the 1970s after the Justice Department forced CBS to sell its syndication unit, so the companies have been on-again/off-again for decades.

The market value of CBS Corp. is about $18 billion. The combined company, ViacomCBS Inc., will have more than $28 billion in revenue and 22% of the U.S. television viewing audience, according to a joint statement from the companies.

The newly formed company, called ViacomCBS Inc., moves to first place in the competition for U.S. television viewers, at four percentage points ahead of Comcast which has 18% of the audience, and Disney and Fox, which each have 14%. The new “multiplatform, premium content” company has production capabilities on five continents and a global reach of more than 4.3 billion TV subscribers in 180 countries, the companies said.

ViacomCBS will benefit from its “distinct competitive position” as one of the “most important” content providers in the world, they said, underscoring the strategic value of the deal. “This will enable the combined company to accelerate the growth of its direct-to-consumer strategy, enhance distribution and advertising opportunities and create a leading producer and licensor of premium content to third-party platforms globally,” the companies said.

This deal goes down as a major chapter in the history of television which once comprised the big three commercial networks. The Walt Disney Company bought ABC in 1996. Comcast acquired NBCUniversal from General Electric in 2011.

Big corporations, especially ones that get bigger and bigger, are getting a lot of attention from politicians these days, with calls primarily from Democratic presidential candidates to break up powerful conglomerates like Facebook and Google. No one has been more vocal in their concerns about the growing influence of corporations than Sen. Elizabeth Warren. The democratic front-runner noted via Twitter how close the CBS/Viacom merger follows the March 20 effective date of The Walt Disney Company’s acquisition of 21st Century Fox. “Consolidation raises serious concerns for consumers, employees, and the entire sector. The Department of Justice should be paying close attention,” Sen. Warren wrote.

Commentary

As Supreme Court Justice Hugo Black explained in an antitrust case involving 1,200 newspaper publishers and The Associated Press, the First Amendment “rests on the assumption that the widest possible dissemination of information from diverse and antagonistic sources is essential to the welfare of the public.” Yet, Americans receive their information from an ever-decreasing number of media conglomerates, and the CBS-Viacom merger perpetuates this trend. Since Justice Black’s day, federal courts and antitrust enforcers have increasingly limited the type of consumer welfare to be promoted by the antitrust laws — usually just price effects — while diversity in distribution and other types of competition receive very little attention. Under this approach, federal enforcers may approve the CBS-Viacom merger without restriction, especially given that CBS and Viacom were previously combined and currently have the same majority shareholder – National Amusements Inc. The recent Disney-21st Century Fox merger ($254B combined market cap) and the AT&T-Time Warner merger ($237B combined market cap), which were larger and arguably more problematic ultimately went through (although the DOJ unsuccessfully challenged the latter).

Edited by Tom Hagy for MoginRubin LLP.

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About this Author

 Dan Mogin Mogin Rubin Managing Partner antitrust, unfair competition and complex and business litigation
Managing Partner

Dan Mogin received his B.A. (Economics) from Indiana University and his J.D. from the University of San Diego. Mr. Mogin was admitted to the State Bar of California in 1980. He is also admitted in The Supreme Court of the United States, the United States Court of Appeals for the Ninth, Seventh and Second Circuits and the United States District Courts for the Southern, Central and Northern Districts of California.

Mr. Mogin’s practice concentrates on antitrust, unfair competition and complex and business litigation. He has been selected as lead or liaison counsel in numerous cases...

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Timothy Z. LaComb Antitrust Lawyer Mogin Rubin Law Firm
Associate

Mr. LaComb is an Associate in MoginRubin LLP’s San Diego office and his practice focuses on antitrust, unfair competition, and complex business litigation, particularly as they relate to mergers and acquisitions. Prior to joining MoginRubin LLP, Mr. LaComb was an Associate at Robbins Geller Rudman & Dowd LLP where he helped secure several multi-million-dollar recoveries for shareholders in merger-related class action litigation.  Through his extensive experience in complex litigation, he has developed an expertise and proficiency in electronic and other discovery-related issues.  Mr. LaComb also worked as a Transaction Associate at David F. Grams & Associates, S.C. immediately after law school. He is admitted in both California and Wisconsin. Tim earned his J.D. from the University of Wisconsin School of Law, where he was on the Dean’s List and a member of the UW Law Moot Court Board, and earned his B.A. in Economics from the University of San Diego.

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