When Shari Redstone, Bob Bakish and Joe Ianniello hold their live town hall meeting Thursday afternoon, it will be spun as a festive affair; the three top honchos of the now officially combined Viacom-CBS will tout the benefits of the merger and how the new company will take on the world of broadcasting.
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But many of the company’s roughly 27,000 employees are in anything but a festive mood these days. At issue: A promise to Wall Street that the new management will squeeze a whopping $500 million in what has been described as “synergies” out of the merger, which is a Wall Street way of saying layoffs are coming, according to people with direct knowledge of the company’s plans.
How many people will get the ax is anyone’s guess at least for the near term, but layoffs are most definitely in the future for the newly merged company if management is to meet the lofty cost-cutting expectations it has set for itself and start boosting the new company’s share price, these people add.
Company spokesmen declined to comment for this story.
Several things about the new company have been well telegraphed. When the merger becomes official after the markets close on Wednesday, the new company will be known as ViacomCBS Inc., trading under the stock symbol VIAC. Redstone, the head of the controlling shareholder National Amusements Inc., has long fought for the combination the two outfits that were purchased, then separated in 2006 into separately traded entities by her father, the ailing media mogul Sumner Redstone.
Shari Redstone will retain the title of chairwoman, a clear indication of who is ultimately in charge of the $25 billion media empire that boasts some of the most popular news, major sports and entertainment programming in America. Viacom controls broadcast staples such as MTV, Comedy Central, Nickelodeon and movie studio Paramount Pictures.
Her longtime associate, Viacom chief Bakish, will oversee the day-to-day operations as chief executive officer and hold a seat on the new company’s board of directors. Bakish will lead the town hall at Viacom’s midtown Manhattan headquarters, and make a presentation described as a celebration of the deal’s merits before an unscripted question-and-answer session, FOX Business has learned. Bakish’s appointment as CEO was clearly a nod to his support for Redstone’s vision of merging the two outfits even amid stiff opposition from CBS’ former CEO Les Moonves and his management team that mounted a court battle to prevent the move.
Moonves, of course, was ousted from the network amid sexual misconduct allegations in September 2018. Moonves’ longtime associate Ianniello headed CBS after the departure and will remain as chairman and CEO of CBS in order to facilitate the merger.
Unlike Bakish, Ianniello will have no board seat and will report to Bakish in the company’s new management structure. But he might have something better than management control in the form of money, and lots of it. In exchange for staying with the company for management continuity, Ianniello will receive a $100 million mostly cash severance that will be paid upon the deal’s close, and then tens of millions of dollars more over the next 15 months.
After the deal was announced in August, management also provided some broad strokes about how it plans to compete in the increasingly difficult and fragmented media business. It has vowed to find ways to monetize its varied programming by transforming the company into a content producer that both sells to and competes with other big players such as Disney and Netflix.
Bakish is also telling analysts that he will develop a more comprehensive streaming strategy to deliver programming through so-called over-the-top vehicles that circumvent traditional cable-distribution packages as consumers increasingly “cut-the-cord” and ditch their cable subscriptions.
What is less known is exactly how management is expected to achieve all these goals, particularly on the cost-savings side. Management has been mum about the exact size of the potential layoffs, other than to confirm they are likely to begin sometime after the deal closes. The information vacuum has put many employees on edge, particularly as management is tasked with squeezing costs out of every department of the company in the coming year, according to people with direct knowledge of the matter.
The CBS side of the company could be in for the most turmoil since under Moonves it was largely shielded from major cost-cutting efforts, a person close to the new company tells FOX Business. Though Bakish will be the executive leading the town hall, all executives may answer questions from employees, and they are aware that they might be queried about the pending job cuts, these people add.
Another question that might come up is the future of the new company. Specifically, can a $25 billion broadcasting content company survive when the media landscape is being dominated by massive conglomerates? By comparison, AT&T with its WarnerMedia subsidiary has a market value of $279 billion while Amazon, the online retailer that’s expanding into broadcast content has a market capitalization approaching $1 trillion.
Senior executives inside ViacomCBS have made no secret that they would like to expand the company sometime after the merger by making smaller, strategic acquisitions such as the content library of the old Miramax film studio. But they also concede that after squeezing out cost savings and improving share price; both companies’ stocks have floundered post-merger announcement despite rising Wednesday as the deal neared its closing date.
They also concede the next step for Redstone and Bakish may be to sell ViacomCBS to one of those bigger players.
In terms of a sale, “nothing is happening at least for a while,” said another person close to management at the new company.