Viacom, owner of the MTV music
channel and the Blockbuster chain of video stores, will buy CBS Corp of the US
for $35 billion in stock. This is the largest ever acquisition in the media world.
Viacom will swap its 1.085 ''class B'' shares for each share
of CBS, which works out to $48.89 per share.
Both companies have had strong personalities leading them
-- Sumner Redstone, chairman of Viacom, and Mel Karmazin, chief executive of CBS, who is
expected to succeed Mr Redstone upon his retirement.
The US Federal Communications Commission had ruled in
August 1999 that companies may own two television stations in a single market. But the
rule that one company cannot own more than one broadcast network stays. The current deal
will give Viacom''s movie and television studio a wider market. Viacom owns 19 television
stations, and CBS owns 16.
The merger is expected to bring about synergistic effects
to the companies. The merger will bring together CBS and Viacom''s Paramount Studio, which
produces hit shows such as Frasier. CBS would get greater coverage and additional
programming outlets to earn more advertising revenue.
For Viacom, CBS is a cash rich company, which will help it
reduce its debt. CBS is also number one in the billboard business, which will also
significantly help Viacom. Viacom also gets access to the huge collection of radio
stations owned by CBS.
Viacom, which is currently the fourth largest media andv
entertainment company in world, will become the second largest with this acquisition. The
biggest company in this business is Time Warner Inc. Viacom also owns other cable
television channels such as Nickelodeon and VH-1.