What's going on?

US broadcasters CBS and Viacom may be on the verge of re-merging � 13 years after splitting up. CBS is reportedly set to make an offer for Viacom, but, somewhat unusually, they reportedly plan to offer less than the company�s $13 billion valuation (takeover offers are usually above the current price) which means a deal could be a long time coming.

What does this mean?

CBS, whose shows include The Big Bang Theory, and Viacom, owner of Nickelodeon and film studio Paramount, initially split up in an attempt to increase the value of Viacom�s shares. The companies have had mixed fortunes since the split: CBS has grown while Viacom has struggled against the likes of Netflix.

In 2016, National Amusements, the majority shareholder in both companies, attempted to reunite the two but failed because the two sides couldn�t agree on valuation, and now they�re reportedly trying again. CBS�s below market offer may be symbolic of the changing TV landscape and Viacom�s tough position.

Why should I care?

For markets: CBS investors like this deal as it could bring a series of synergies.
CBS shares were up by 3% on Tuesday with investors likely positive on potentially buying Viacom at a discount. Additionally, analysts have highlighted potential synergies of $500-750 million from the deal. On the other hand, Viacom�s shares fell 3-4% with investors likely disappointed at the suggestion that the company is not worth at least its current value to a potential bidder.


The bigger picture: Cord-cutting and online streaming services are tough competition for traditional players.
More Americans than ever are �cord-cutting�, i.e. unsubscribing from cable packages and going online to watch TV and video through streaming services. For example, Viacom owns MTV which was once the crown jewel in music videos. That crown is now squarely on the head of YouTube � its most popular music video to-date has almost 5 billion views.