The merger is what is known as a stock swap, and values Viacom at about $11 billion as of Monday’s closing market price. Under the swap, an investor with 1,000 shares of Viacom would receive 596.25 shares of CBS. CBS shareholders will in effect own about 60 percent of the combined business. The deal does not include any cash, making it a tax-free transaction. The ratio of shares is fixed for all Viacom investors, including those who own its voting stock.
The media industry’s decades-long success had been contingent on people continuing to pay for cable television, and customers have been cutting the cord for years. The inexorable shift toward digital entertainment has profoundly reshaped the industry’s economics. Netflix, for example, has a significant lead with more than 151 million subscribers around the world.
Still, it’s better late than never. “Like all good things, it was worth the wait,” Mr. Bakish said in a brief interview. “We’re really creating a global premium powerhouse,” he added, citing the benefit of combining Viacom’s ad-supported streaming service, known as Pluto, with CBS’s digital subscription product, All Access.
He listed a three-part strategy that includes selling more subscriptions, elevating digital advertising sales and creating original shows for other streaming platforms, including Netflix.
“Together, Viacom and CBS will become a significant player,” he said.
The deal is an important moment for Ms. Redstone, who has long waited in the shadow of her father, Sumner Redstone, the combative, cantankerous entrepreneur who over decades forged a media empire through a series of mergers bankrolled by big loans. He built a corporate empire only to dangle succession in front of his daughter, creating a caustic relationship that led to one of the most bitter family disputes in corporate America.
Ms. Redstone, who has been vacationing in Greece with her family, was not present during the negotiations, but her ascent in the business is sure to portend further deals for the company. She has started to weigh the possibility of snapping up other media businesses after the merger, several people familiar with her thinking have said. She has considered the few media companies remaining, including the cable network Starz, which has a budding international business, and Sony Entertainment, which has a large television production business.
This is a developing story and will be updated.