TUESDAY, AUGUST 13 , 2019. THE WASHINGTON POST EZ RE A
BY STEVEN ZEITCHIKnew york — CBS and Viacom
are inching closer to a deal that
would join the onetime siblings
after a three-year dance.
But whether the reunion will
solve their problems or simply
kick them down the road re-
mains one of the media world’s
biggest questions.
The CBS and Viacom boards,
under controlling shareholder
and vice chairwoman Shari Red-
stone, are negotiating to bring
the companies together to cre-
ate scale and better compete
with larger media players.
According to two people fa-
miliar with the discussions who
were not authorized to talk
about them publicly, the sides
were making progress, with sev-
eral hurdles still to overcome.
Price remains among the largest
of these sticking points, as
board members for each side
negotiate the valuation for the
all-stock deal, which hovers
around six CBS shares for every
10 Viacom shares. CBS has a
market capitalization of about
$18 billion while Viacom’s sits at
just under $12 billion.
Neither a CBS nor a Viacom
spokesman would comment for
this story.
The executive suite of a com-
bined company would likely
have Bob Bakish — the Viacom
CEO who has been viewed by
Wall Street as a strong steward
since taking the role in 2016 —
serving as chief executive of the
combined company. Joe Ianniel-
lo, who became CBS’s acting
chief executive after Leslie
Moonves left in September in
the wake of sexual assault alle-
gations, would remain in a more
circumscribed role focusing on
aspects of CBS’s operations.
But equally important as the
financial and executive arrange-
ments are what a merger would
— or won’t — do for the com-
bined company.
Each side of a rejoined CBS-
Viacom would focus on a differ-
ent part of the media world. CBS
is in the broadcast business via
its highly watched flagship net-
work and the premium game via
Showtime; Viacom is in the film
industry with Paramount Pic-
tures and holds a wide range of
basic-cable networks such as
MTV, Nickelodeon and Comedy
Central. Together, the thinking
goes, the two would create a
content well deep enough to
hold their own against Disney,
Comcast, WarnerMedia and a
slew of Silicon Valley players
selling content directly to con-
sumers.
That well would in turn allow
the combined CBS-Viacom to
offer content via its own plat-
forms — either existing ones
such as CBS All-Access, Show-
time and Pluto TV or a newentity that would draw from the
CBS-Viacom roster.
Michael Nathanson, a veteran
media analyst, echoed the
thoughts of some of his col-
leagues when he said in a note
to investors that the “initial
separation of these companies
made zero sense” and also said
that the reunion will help both
CBS and Viacom compete with
Netflix, WarnerMedia and oth-
ers.
But whether scale alone is
enough to do that remains to be
seen.
Experts say that at the very
least CBS and Viacom would
need a major strategic initiative
or acquisition to make the movepay off.
“To me, a combination is just
a first step,” said Lloyd Greif,
president and chief executive of
Los Angeles investment bank
Greif & Co. “If there isn’t a next
step, they’re toast.”
He said the combined compa-
ny would need even more high-
quality content or a viable
streaming option to realize any
advantage from joining.
That would be necessary, in
part, because neither CBS nor
Viacom has a significant
streaming presence on its own.
It would also take years — and a
loss of revenue — to unwind
deals each company has made
with competitors. CBS, for in-stance, produces the buzzy se-
ries “Dead Like Me” for Netflix,
while MTV Studios has been
generating revenue by making
shows for Facebook and Jeffrey
Katzenberg’s Quibi.
Skeptics of the deal also say
that it would mean each side
would be saddled with the oth-
er’s problems — CBS, for in-
stance, would take on all the
cord-cutting challenges Viacom
faces.
Investors seemed to feel this
way, sending both stocks down
Monday upon the news — Via-
com 5 percent to $28.53 and CBS
2 percent to $48.03.
Even a combined company
would still be relatively small by
media standards — a market
capitalization of about $35 bil-
lion. Disney has a market cap of
$244 billion, while Comcast’s is
at $192 billion.
Patrice Cucinello, a director
in the media and entertainment
team in U.S. corporate ratings
for Fitch, said that “I think it’s
fair to say this is the first part of
a longer-term strategy.”
She said she believed a com-
bined CBS-Viacom is likely to
again be a player in mergers and
acquisitions. A larger company
could buy another outfit, such
as Lionsgate, to get bigger.
Or a merger could make the
new company attractive enough
to be sold to a larger player, such
as a Silicon Valley outfit or a
cable-distribution company
looking to boost its content
offerings.
A CBS-Viacom reunion wouldbe the latest move for compa-
nies that have at times seemed
to be microcosms of the corpo-
rate world’s larger cycle of ex-
pansion and contraction.
The two sides came together
in 2000 as part of the turn-
of-the-century merger mania
that joined many business (in-
cluding AOL and Time Warner),
as Viacom bought CBS’s parent
company, Westinghouse.
Sumner Redstone, who for
years controlled both compa-
nies, split them in 2006, in the
belief that empires could ex-
pand and flagging stock prices
revived with more specialty-fo-
cused firms.
Now they may be coming
together again as part of the
late-decade push for scale — this
time driven by the entrance of
Silicon Valley players and the
Disney-Fox combination it in-
spired.
As for a combined company
becoming more attractive for a
sale, analyst Doug Creutz, a
managing director of Cowen,
points out that Silicon Valley
players such as Netflix or Apple
could have bought one — or
both — of the companies already
if they wanted to, without the
need for a merger.
In any event, the Redstones
have historically preferred to
hold on to their assets.
“Then again,” Greif said, re-
calling the Disney acquisition of
21st Century Fox, “Rupert Mur-
doch wasn’t really a seller either,
until he was.”
steven.zeitchik@washpost.comAs CBS-Viacom merger advances, industry ponders what would come next
LUCY NICHOLSON/REUTERS
The two companies first came together in 2000 but split six years
later in the hopes of succeeding more as specialty-focused firms.BY MARK BERMANA friend of the gunman who
killed nine people outside a Day-
ton, Ohio, bar last week told au-
thorities he bought body armor
and equipment for the attacker
and helped him assemble the
weapon used in the rampage, ac-
cording to a court filing unsealed
Monday.
Those details were included in a
criminal complaint charging the
friend — Ethan Kollie, 24 — with
two counts related to his purchase
and possession of firearms. Nei-
ther count relates to the shooting
itself.
Benjamin C. Glassman, U.S. at-
torney for the Southern District of
Ohio, stressed that while the
charges emerged from the investi-
gation into the Dayton shooting,
they included no suggestion that
Kollie knowingly played a role in
plotting the attack.
“Mr. Kollie does not stand ac-
cused of intentionally participat-
ing in the planning of that shoot-
ing,” Glassman said at a news brief-ing. “We have no evidence of that.”
An attorney for Kollie said in a
statement that his client spoke to
federal officials three times to try
to help the investigation.
“He does not deny his friend-
ship with Connor Betts, and he was
as shocked and surprised as every-
one else that Mr. Betts committed
the violent and senseless massacre
in the Oregon District,” the attor-
ney said.
Kollie was charged with pos-
sessing a firearm while being an
unlawful user of a controlled sub-stance and making a false state-
ment regarding firearms.
Authorities said Betts, a 24-
year-old described by some who
knew him as having a history of
violence against girlfriends and a
“hit list” of people he hoped to
target, donned body armor and a
mask before opening fire with an
AR-15-style weapon in a Dayton
nightlife area Aug. 4.
Before police officers killed him,
Betts killed nine people.
The Dayton attack occurred
hours after a gunman in El Pasoopened fire at a shopping center,
killing 22.
Kollie and Betts were friends
who had repeatedly done “hard
drugs” together, P. Andrew Gra-
gan, an FBI special agent, wrote in
an affidavit in the complaint.
Kollie told FBI agents he bought
the body armor and a 100-round
magazine that Betts used during
the massacre, Gragan wrote. He
stored them in his house “to assist
Betts in hiding them from Betts’
parents,” Gragan wrote.
Kollie told the FBI that about 10weeks before the shooting, he was
in his apartment, watching and
helping Betts assemble the weap-
on later used in the shooting.
A firearms transaction form
filled out by Kollie showed that he
checked “No” in response to a
question asking whether he un-
lawfully used marijuana or any
other drug, according to Gragan.
When asked why he answered that
way, Gragan wrote, Kollie admit-
ted that he lied to be able to obtain
the gun.
mark.berman@washpost.comFBI: Dayton shooter’s friend helped assemble weapon, bought body armor
For the move to pay off,
it must be followed by
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