ViacomCBS CEO Robert Bakish Discusses The Merger

Updated on

First On CNBC: CNBC Transcript: CNBC’s Andrew Ross Sorkin Speaks with ViacomCBS CEO Robert Bakish on CNBC‘s “Squawk Box” Today

WHEN: Today, Wednesday, August 14, 2019

WHERE: CNBC’s “Squawk Box” – Live from Viacom’s offices in New York, NY

The following is the unofficial transcript of a FIRST ON CNBC interview with ViacomCBS CEO Robert Bakish and CNBC’s Andrew Ross Sorkin on “Squawk Box” (M-F 6AM-9AM ET) today, Wednesday, August 14th, live from Viacom’s offices in New York, NY. This interview follows news that CBS and Viacom have reached a merger deal, and Bakish will run the combined company, which will be named ViacomCBS. The following is a link to video of the interview on

Get The Full Seth Klarman Series in PDF

Get the entire 10-part series on Seth Klarman in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Q2 hedge fund letters, conference, scoops etc

Watch the full interview with the newly formed ViacomCBS CEO Robert Bakish

All references must be sourced to CNBC.

ANDREW ROSS SORKIN: Thank you, Kayla. Joining us right now is Bob Bakish. He is the current President and CEO of Viacom, and he will become the CEO of Viacom/CBS when this big merger closes. Great to have you here.

ROBERT BAKISH: Great to see you, Andrew.

ANDREW ROSS SORKIN: It’s a big day for you. Announcing this transaction yesterday after so very long. This has been, now -- how many years in the works have you been trying to get this together?

ROBERT BAKISH: Well, you can argue the third time’s the charm. We started this discussion at the end of ’16 when I was acting CEO of Viacom. Then it was revisited again about a year and a half later. And this time, yesterday, we announced we’re putting the two companies together.

ANDREW ROSS SORKIN: So, let’s talk about the strategic rationale for doing the deal. But, also, given all of the changes even over the last three years, how that rationale may or may not have changed.

ROBERT BAKISH: Sure. So, if you look at it, what we’re creating is a leading multiplatform global content company. And it really has almost unmatched scale on the content side: 140,000 television episodes in the library. 3,600 films. Very substantial production capabilities feeding, you know, our own platforms, feeding third parties. We are leaders in markets all around the world, certainly in the U.S. here with the CW and CBS and obviously the Viacom pay networks. In places like the UK, where we have a Cornerstone and Channel 5, Argentina, Australia, India and then branded network distribution all around the world. And we also have a very compelling play in D to C. Not something that people have talked about a lot. But, you know, CBS clearly embarked early on a subscription strategy. CBS All Access, Showtime OTT. Viacom, on the other hand, chose to enter in the free space, Pluto TV, the largest free streaming service in the U.S. You unite those two together and you really have a D to C ecosystem. Very compelling, both with substantial -- millions of users. Good, strong growth. So, on the product side, the asset side, a lot going on. And then financially, a real power house company.

ANDREW ROSS SORKIN: You just said the word unmatched scale. I think there’s some who would take issue with that. You look at a Disney, it has a market cap of $245 billion, for example. Netflix, value of $136 billion. I think the larger question, actually, in terms of scale is: is this going to be enough? And two or three years from now we’re going to see you want to – to continue to make acquisitions to compete at that level or whether you’d ultimately have to sell the company, given this scale question because we have these big giants?

ROBERT BAKISH: Well, let’s unpack scale. Where do you see value in scale? Clearly, you see value in scale in terms of margins and being able to amortize things like SG&A and corporate cost. No question we have scale and bringing the two companies together gets us more scale there. We have talked about $500 million in synergies on the cost side, as an example. You look at content, we clearly have scale and content. Between the studios that we operate, Paramount, CBS Television Studios, Paramount Pictures, Nickelodeon Animation, Viacom International Studios. Again, a library of 140,000 television episodes, 3,600 films. We have 750 series ordered to or in production. There is true content scale here. And then you go and you look at dealing with partners. On the B2B side, distributors and advertisers. We have the number one television position in the United States by audience. And that’s general audiences, like 25 to 54s, 18 to 29s and specialized like kids and African-Americans, Hispanics and et cetera. So, we clearly have relevant scale for advertisers and for distributors. And so, there’s no question we have scale here. There’s no question the companies are stronger together than they were independently. And, you know, we’re going to start executing with that.

ANDREW ROSS SORKIN: In terms of the savings, you have put out the $500 million number. At one point, there was a $1 billion number that was being floated. You look at the Discovery Scripps deal, there’s $1 billion of savings. Is the $500 million number the low point ob this? I mean, do you think there’s more savings out there? Because it sounds like between CBS and Viacom, there was a difference over this issue.

ROBERT BAKISH: Look, this is day two, right? We announced the deal yesterday. So, we have a lot of work to do. I feel very good about the $500 million synergy number on the cost side. Again, this is cost, excluding programming, excluding marketing, excluding revenue. So, there’s a very material opportunity. And as we get into it we’ll move forward and begin to realize that. That number is over 12 to 24 months. A significant portion of it will be in the first 12 months and then a balance across the second year.

ANDREW ROSS SORKIN: What do you think of the culture or potentially even culture clash between the two companies? And I say this -- it sounded like Viacom has wanted to do the deal for a long time, but CBS did not. Both under Les Moonves and there was push back for quite some time. How do you see that playing itself out internally as you try to merge the companies together?

ROBERT BAKISH: Look, I think there’s a tremendous opportunity to create a unified ViacomCBS. And I think there’s a lot more in common in the cultures than people give credit to. These companies are built on world class premium content. The employees in it love brands. Talk about a brand that’s – an employee of CBS News, and they love CBS News, just like an employee at MTV loves MTV. So, there’s a lot of commonality in culture. And there’s incredible value in the combination. You look at the strategy we’re going to start executing against. Building a real leadership position in D to C through this combination of subscription product and ad-supported product. This ecosystem, tremendous opportunity there. You look at expanding the partnerships and building new partnerships with advertisers, with distributors. Tremendous opportunity there for all of the people that work in that area. You look at being one of the most significant content suppliers in the world. Tremendous opportunity there. So, I think very quickly this culture will come together. And the other thing I would say to you as an example is when I took the acting CEO job at the end of ’16 for Viacom, this company was totally siloed. It had a lot of issues. Paramount was an island. By the way it had lost half a billion dollars. The networks even in the U.S. weren’t that collaborative in terms of running together. But today we run one Viacom. We have multiple business units that are building off of the brands, whether it’s Viacom Digital Studios, obviously, domestic networks, international networks and Paramount. And that was the result of a vision, a management team and then executing. It’s the same kind of thing we have to do at ViacomCBS.

ANDREW ROSS SORKIN: One of the sticking points in these negotiations for a long time has been governance, who would be in charge, how this would work. Joe Ianniello is going to stay on and run the CBS unit. But when you talk about the integration, explain the rational in terms of Joe’s role and how that is going to work.

ROBERT BAKISH: Sure. So, look, I’ve known Joe Ianniello for 20 years. I have tremendous respect for what he’s done at CBS. He’s clearly a world class executive. He and I have spoken a lot in the days leading up to yesterday. And including yesterday. We haven’t talked today, but it is early still. And there is a tremendous interest, joint interest, in unlocking the value of these combined companies. Yes, he will take the leadership position, running the CBS branded assets upon closing. By the way, we need someone to run those assets. That’s a big complicated business. He is ideally suited to do it because he has, you know, 20 years of knowledge in that space and a real passion for it. At the same time, he knows that we have to create value from these assets. We are going to have to work across the company. He’s 100% committed to it and I can’t wait to get on with it with him.

ANDREW ROSS SORKIN: He has a compensation arrangement that pays him $70 million if he doesn’t get the top job. Is he going to be paid that?

ROBERT BAKISH: Look, you can look at the public filings and all. Again, we are thrilled to be moving forward together. We are going to create a lot of value here. And we can’t wait to get on with it.

ANDREW ROSS SORKIN: So, a public – I mean, we have seen the public filings on this.

ROBERT BAKISH: Yeah, his contract is what his contract is. And you can pull the public filings.

ANDREW ROSS SORKIN: Let me ask you, in terms of content, in terms of content spend, do you think you are going to have to spend more money on content? I mean, everybody is building up – trying to build a library. You talked about the size of your library already.

ROBERT BAKISH: So, on the trailing twelve-month basis, the combined company spent $13 billion on content. And one of the real values of the deal is the financial position the combined companies create. $28 billion of revenue, $6 billion of income, $2.5 billion of cash flow, commitment to investment grade. Why does that matter? It means we can sustain on an organic basis, growing commitment to content and innovation. And it also means we have a balance sheet that will let us pursue other opportunities that might emerge in the marketplace. And that’s critical today. Because there will be opportunity. And just as we used M&A as a vehicle to accelerate our strategy at Viacom, we will potentially use M&A as a vehicle to accelerate our new strategy at a combined ViacomCBS.

ANDREW ROSS SORKIN: Can we talk about sort of how you see the rest of the landscape? There are these other players, and I sort of mentioned it to you at the beginning of this interview, the scale issue, where people say, ‘Ok. Are they going to go after Discovery Scripps next, are they going to go after Stars?’. Do you -- how do you think about the future? I know you’re just getting started, so this is almost too early to ask, but how do you see that play out?

ROBERT BAKISH: Well, again, what we announced yesterday was the creation of a leading global multiplatform premium entertainment company. And that’s a big deal. And again, we talked about the content scale, we talked about our scale with distributors and advertisers, we talked about our growing scale in D to C, we talked about our financial firepower. So, we are very well positioned moving forward. Of course, we have people who we are going to compete with. And we will. And we’ll look at what other opportunities emerge. But, I’m feeling great about the hand I’ve now been dealt. I’m feeling great about the team we are going to put in place. And by the way, we made announcements yesterday and you see we are going to have a blended management team with strong executives from both companies in the combined company. And, as you said, it is early days, we’re just getting started.

ANDREW ROSS SORKIN: What is the role of Shari Redstone now in all of this?

ROBERT BAKISH: Shari is an unwavering advocate for both companies. She has been for years now. She certainly is thrilled at the prospect and now reality of bringing these companies together. She is an exceptionally intelligent and passionate advocate for these assets. She’s become a great adviser to me and other members of our management team. And so, we’re thrilled that she is our controlling shareholder.

ANDREW ROSS SORKIN: Okay. Final question, and it’s philosophical. These companies came together, they came apart, coming together. Should they never have come apart the first time?

ROBERT BAKISH: Look, they came apart at a different time in media with different circumstances around it. What I can tell you unequivocally is putting them together today is the right move. It creates incredible opportunity. You look at the valuations of the companies, the multiples are very low. Why were they low? Because there was a cloud of uncertainty hanging over both of them. That cloud has now been removed. And I think people will pretty quickly see as we execute against this strategy how powerful this company will become and how compelling an opportunity it is to be part of.

ANDREW ROSS SORKIN: Great. Bob Bakish, thank you for joining us this morning. Appreciate it.

ROBERT BAKISH: Thanks, Andrew. Appreciate it.

ANDREW ROSS SORKIN: Good luck with the transaction. Guys, back to you.

Leave a Comment

Signup to ValueWalk!

Get the latest posts on what's happening in the hedge fund and investing world sent straight to your inbox! 
This is information you won't get anywhere else!