Report: CBS, Viacom To Merge

September 7, 1999 / 6:28 AM EDT / AP

CBS Corp. and Viacom Inc. were expected to announce they are combining the companies in what would be the biggest media merger ever, The Wall Street Journal and Variety reported Tuesday

The combination would create a media powerhouse owning the CBS network, several major cable networks -- including MTV, Nickelodeon, Country Music Television and the Nashville Network -- along with film studio Paramount Pictures.

CBS's market valuation is about $37 billion at Friday's closing stock price, while Viacom's market capitalization is about $31 billion, the newspaper said on its Web site.

The merged companies would likely be run by CBS's chief executive officer, Mel Karmazin, who rose from the ranks of the radio industry to take control of CBS in 1997, the Journal said.

The deal marks a new chapter in the long career of Viacom Chairman Sumner Redstone, 75, who took control of Viacom in 1987 and seven years later greatly enlarged it by buying Paramount Communications Inc. and Blockbuster Entertainment Group.

Terms of the transaction were not immediately available.

The pact with CBS comes just a month after the Federal Communications Commission relaxed television station ownership rules and triggered a round of discussions between media companies over possible mergers.

Viacom owns a station group and a 50 percent stake in the UPN network. The future status of UPN was unclear because government rules prevent one company owning more than two networks.

The merger reunites two companies split apart three decades ago by government rules, eliminated a few years ago, aimed at preventing networks owning their own programming.

In recent years, however, deregulation has sparked a move toward vertical integration in the television industry, highlighted by Walt Disney Co.'s purchase of ABC in 1996.