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Investors bearish on whether Viacom and CBS can compete with streaming giants – Axios

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Data: Money.net; Chart: Andrew Witherspoon/Axios

The merger between Viacom and CBS is expected to close this week, but investors don’t seem too excited about it. Shares from both companies have been down since the all-stock deal was formally announced in mid-August.

Why it matters: Analysts have expressed reservations about whether the combined company will be big enough to compete with the likes of Amazon and Netflix.

  • Last month, CBS was sued by an investor who argued the all-stock acquisition of Viacom is better for the company’s majority shareholder Shari Redstone than other investors.

Yes, but: Viacom’s business looks healthier than it has in a long time.

  • Last quarter, in its final as an independent company, Viacom’s movie business Paramount reached full-year profitability for the first time since 2015, and its domestic TV business posted advertising growth for the first time in six years.

What they’re saying: Redstone has argued that the new company, with a combined annual content investment of $13 billion, will be able to compete with the big tech giants in creating lots of good content.

  • Bob Bakish, the new CEO of the combined company, told CNBC’s Jim Cramer Monday that neither he nor management are happy with the valuation of Viacom right now, but he believes that the marketplace will see the value of the combined company after the deal closes.

What’s next: Layoffs are expected when companies of this size combine, particularly in redundant departments like personnel, sales or real estate.

Go deeper: CBS and Viacom agree to massive merger



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