CBS, Viacom To Merge: What Comes Next?

CBS Corporation CBS confirmed a merger agreement Tuesday with its sister company Viacom, Inc. VIAB.

CBS and Viacom share the same parent company, National Amusements, which is controlled by Shari Redstone, daughter of Sumner Redstone.

Two Surprise Takeaways

One of the biggest surprises from the details of the merger agreement: acting CEO Joe Ianniello will remain with the newly formed company and play a "significant role" in leading the CBS side of the business, New York Times corporate media reporter Ed Lee told CNBC Wednesday.

Another takeaway from the merger: the company identified just $500 million in synergies, Lee said.

This implies the level of overlap between the two media companies isn't as significant as some investors had previously assumed.

'Incredible' Timing

The merger of CBS with Viacom is a "great triumph" for Shari Redstone and comes at an "incredible" time for the media industry given a slew of recent M&A deals, Jeff Sonnenfeld, the senior associate dean for leadership studies at the Yale School of Management, told CNBC.

The combination of the two is a "match made in heaven" and a testament to Redstone's leadership in an industry dominated by people "not getting along with each other," he said. 

Is It Enough?

The combined size and scale of a combined CBS and Viacom may not prove to be large enough to take on competitors like Netflix, Inc. NFLX, the New York Times' Lee said. 

Lee said Redstone will likely be looking to acquire other media assets over a two- to three-year period.

Even if she acquires a company like AMC Entertainment Holdings Inc AMC, the larger entity will be "more attractive overall," but won't be big on the same playing field as Netflix, he said. 

CBS shares were down 7.49% at the time of publication Wednesday, while Viacom shares were falling by 7.57%. 

Related Links:

CBS Has Strong Quarter, But Viacom Merger Uncertainty Keeps Analysts On Sidelines

Bank Of America Revisits CBS-Viacom Merger Reports