Breakingviews - CBS-Viacom merger is more whimper than Big Bang

The CBS Television Studios campus is seen in Los Angeles, California, U.S. August 3, 2018. REUTERS/Lucy Nicholson

Putting the U.S. broadcaster and the MTV operator back together after 13 years has not been easy, despite their common controlling shareholder. But on Tuesday the two companies, to be called ViacomCBS, agreed to a stock swap. Existing CBS shareholders will own 61%, with Viacom investors owning the rest. Shari Redstone, the daughter of nonagenarian Sumner, will assume the chair of the board and Bob Bakish, Viacom’s current leader, will run the new media firm.

Take the S&P 500 Media and Entertainment benchmark. It’s up roughly 20% since mid-August 2016. Three years ago, the combined market capitalizations of CBS and Viacom added up to over $40 billion. Had their values increased in line with the sector, the two companies would together now be worth well over $45 billion. They’re actually valued at only two-thirds of that.

Meh. This is about the 20th time they've merged with each other.

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