Mergers, Acquisitions and Takeovers Case Study

Viacom : Is Divorce Better Than Marriage?

OR

Abstract:

This case traces the origin, development and growth of Viacom from a subsidiary company to becoming the world’s third largest media conglomerate. The main focus of the case is its merger with its parent company CBS in 2000 and then the decision made in 2005 to split Viacom back into two companies; Viacom and CBS. The case describes the industry situation in 2000 and 2005, and the rationale which led to the decisions. The operating business segments of Viacom before the split and the businesses Viacom and CBS would operate after the split have been explained in detail.

The case describes the media landscape and the trend of consolidation and mergers in 1990s that led to the formation of huge media conglomerates operating in all possible media and entertainment properties. With the passage of time, achieving synergies between such large and sometimes disparate assets became questionable, leading to the conglomerates pruning their businesses by focusing on the core businesses and spinning off the non core ones. This case on Viacom is a classic example of the same phenomenon. The succession planning undertaken by the Viacom’s CEO Sumner Redstone and the opportunities and challenges in front of the newly appointed CEOs of the two companies Viacom and CBS and their vision in taking their respective companies forward has been described.

Pedagogical Objectives:

• To discuss and debate on the decision to split a media conglomerate into two separate companies
• To identify the challenges and opportunities lying ahead for the separate entities
• To analyse the mergers and acquisitions strategy adopted by media conglomerates.

Keywords : Mergers,Acquisitions,Alliances Case Study;Viacom; CBS; Media conglomerate; Merger; split; acquisition; advertising; Programming; Broadcasting; Syndication; Network; Cable television; Radio; Outdoor advertising; Television; Studio; Consolidation; Horizontal integration; Vertical integration; Economies of scope; Economies of scale; cross promotion; strategy; regulation; succession planning; competition; synergies

Contents : 
Rationale Behind The Merger
Increased Viewership
Advertising Advantage
Viacom Business Segments Post Merger
Broadcast Television
Splitting Up
Major Media Mergers And Acquisitions 1989-2000