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Tuesday, September 7, 1999 Published at 16:37 GMT 17:37 UK

Business: The Company File

Media giants in $80bn merger

Viacom says the future is unlimited for the new company

US entertainment company Viacom is merging with television giant CBS, in the world's biggest media merger.

The new entertainment empire, to be called Viacom, is valued at $80bn and will rival big names such as Walt Disney.

Effectively Viacom is buying CBS, giving it a price tag of $36bn.

[ image: Viacom chairman Sumner Redstone is one of the most colourful people in the US media industry]
Viacom chairman Sumner Redstone is one of the most colourful people in the US media industry
It will have interests ranging from films and TV to books and the Internet. Viacom will own not only the CBS network, but also several major cable networks - including MTV, VH1 and Nickelodeon, and Paramount film studios. It will have a majority interest in Blockbuster Video, the world's biggest video rental chain.

A joint statement from the two said the new group will be the world's leading company in the production, promotion and distribution of entertainment, news, sports and music.

Chairman of Viacom, Sumner Redstone: "Content is still king"
The deal was described as a merger of equals, not an acquisition.

After the merger was announced, shares in Viacom were up 2-1/2 at 47-13/16 and CBS was up 1-3/4 at 50-11/16.

CBS's most famous celebrity is TV host David Letterman.

New stock for shareholders

[ image: CBS president Mel Karmazin will be the merged company's chief operating officer]
CBS president Mel Karmazin will be the merged company's chief operating officer
The deal comes a month after the Federal Communications Commission (FCC) relaxed television station ownership rules and triggered a round of discussions between media companies over possible mergers.

The deregulation has prompted further moves towards integration in the television industry.

Another set of rules, which prohibited television companies from owning their own production companies, was also repealed several years ago.

The new company will be headed by Sumner Redstone, who took over Viacom in 1987 and seven years later bought up Paramount and the Blockbuster Entertainment Group.

Redstone, 75, will remain chairman and chief executive of Viacom.

CBS president Mel Karmazin, 56, will be the company's president and chief operating officer. Some analysts consider Mr Karmazin to be the heir-apparent of the company, once Mr Redstone steps down.

The new group will compete on equal terms with other US television companies like ABC, part of the Walt Disney Company, NBC, which is owned by General Electric, and CNN, now part of Time Warner.

The deal, which is due to be completed early next year, will see CBS shareholders swap their shares for Viacom stock, valuing CBS at $48.89 a share.

Between them, the companies had revenues of about $21bn last year.

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