MERGING FORCES

September 7, 1999
		Viacom and CBS announced plans today for the media industry's largest merger ever. A discussion with experts follows this background report.

June 24, 1998: Examining the possibilities of the AT&T and TCI merger May 26, 1998: The rise of corporate mergers May 11, 1998: A look at the second largest merger in history May 7, 1998: The Daimler and Chrysler merger April 13, 1998: Bank industry mergers affecting the consumer April 10, 1997: Media mergers at tele-communication industries. Browse the NewsHour's coverage of the media.   Viacom CBS Yankee Group New Yorker Magazine	BETTY ANN BOWSER: Analysts say this is the biggest media merger in history. At a news conference in New York City this morning Viacom President and Chief Executive Officer Sumner Redstone made the announcement. SUMNER REDSTONE: This is a partnership that makes perfect sense because Viacom and CBS are natural partners. What we are announcing today is a merger of equals -- a merger that is unequaled in the quality and power -- the power of its content, the breadth of its distribution -- audiences, consumers around the world will benefit from this merger and in the process we will create an $80 billion giant.
	With approval, a huge company
	BETTY ANN BOWSER: If approved by the Federal Communications Commission, the deal will create a company with a major television network, a movie production studio, vast holdings in cable television, the largest outdoor advertising company and assets that will rival other media moguls like Time Warner and Rupert Murdoch's News Corporation. The deal comes one month after the FCC announced it intends to allow companies to own more than one TV station in a single market -- under certain conditions. CBS already owns 14 television stations. Viacom has 19. And in five cities both Viacom and CBS each currently own TV stations. The FCC doesn't allow any company to penetrate more than 35 percent of the American television market with its ownerships of stations. CBS President Mel Karmazin said he will try to persuade the FCC to change that rule. MEL KARMAZIN: We have said many times, I mean long before this merger, that, you know, with the Internet and with technology, that the limit -- limiting a company to 35 percent of the country is really not a relevant law any longer. It may have made sense at one time, and, yes, we certainly would like to see that cap changed but at end of the day it's up to the regulators and if the regulators see it as we do, it should go away. If in fact it doesn't, then we will find ourselves with 35 percent, with 41 percent of the country needing to get down to 35 percent. And we will through swaps or through asset divestitures be in compliance.
	Far-reaching assets
	BETTY ANN BOWSER: The new company will keep the name Viacom. In addition to Paramount Pictures -- which produced the Oscar winning movie "Titanic,"the largest grossing picture of all time -- Viacom will also own the CBS television network. And Showtime, which would be able to broadcast programs and movies made by Paramount. It will also own CBS News and the top rated news magazine program "60 Minutes." It will also own Blockbuster Video, the world's leading retailer of video rentals, with 6,000 stores in 27 countries. Karmazin said the breadth and the depth of the new company will make it ripe for cross promotion. MEL KARMAZIN: We will reach the people in the home, obviously, watching the number one network, watching our cable channels. We will reach people outside the home, when they're in their cars and seeing our billboard, and seeing our bus advertising, and listening to our radio stations. You know, we have done a great deal of cross promotion within CBS. There is the ability of working hand in hand as TNN and Country Music Television has done with our country music radio stations. There is the opportunity for MTV to do it with our rock stations. So, we really see this thing as being a great cross promotion. BETTY ANN BOWSER: The new company will be headed by Redstone, who will remain CEO, and Karmazin will become its new president.