In early July 1999, Viacom Inc, owners of the MTV brand and Paramount Pictures, announced the acquisition of CBS Corporation for, what was then, the richest media merger deal estimated at $36.75 billion. The deal, first suggested by Mel Karmazin, then president of CBS, was a result of the relaxation by the Federal Communications Commission (FCC) of rules on media concentration in local television markets.
The merger would allow a merged CBS-Viacom to retain most of its lucrative television stations. Viacom owner, Sumner Redstone, one of the richest men in the US and a media mogul, fell to Mr Karmazin's charms and acquiesced to the acquisition. Mr Redstone is the chairman and chief executive of the merged entity, while Mr Karmazin becomes chief operating officer and presumed successor to Mr Redstone when he retires.
The combined entity, which retains the Viacom name, now controls a huge asset base, which includes the cable networks MTV, VH1, Nickelodeon, Showtime and Comedy Central, the Infinity Broadcasting Company (radio and outdoor media), Paramount Pictures, Simon & Schuster, Blockbuster Video, CBS Television, a number of high-traffic websites (including CBS Marketwatch.com and Sportsline.com) and and a host of production and syndication companies, cable and broadcast.
Concerns were raised by activist groups that the merger would open the floodgates for more giant media mergers, and accelerate the trend of media synchronising their programming with promotions in television, radio, billboards, books, movies and even theme parks. The groups also raised the issue of media being controlled by a relative handful of giant conglomerates. These groups sought to draw the attention of the FCC to the issue of freedom of the press and quoted the example of producers fired by CNN for exposing evidence of US use of nerve gas in the Vietnam War.
Despite such concerns and representations, the FCC gave its approval for the merger. Both Viacom and CBS are themselves products of a complex series of mergers and acquisitions over the past 20 years. CBS came into being when it was acquired in 1995 by Westinghouse Electric, the biggest operator of radio stations as well as a major electronic equipment manufacturer.
On closing down its entire manufacturing operations, Westinghouse took CBS as its corporate name, to focus exclusively on becoming a media giant. In 1996 the company acquired Infinity Broadcasting, run by Mel Karmazin. Viacom owner Sumner Redstone began with his movie theatre company, National Amusements.
He then built his media empire through a series of acquisitions, funded by high-interest debt, where he bought Viacom (which launched MTV), Paramount and Blockbuster Video for $3.4 billion, $10 billion and $8 billion respectively.