Viacom-CBS to build global brands

The merger of two US media giants will have significant impact on the Internet business.

Viacom's $35bn (£22bn) merger with CBS creates one of the most formidable brand-building opportunities ever available to online advertisers, officials of the companies said in a press conference on the deal Tuesday.

The monster transaction is the largest media merger on record, creating a conglomerate second in size only to Time Warner. Not only will the concern span major broadcast and cable television, film, radio and theme park companies, but it will bring together Internet sites for those properties under one corporate parent, offering an "unprecedented" opportunity to advertisers, officials of the companies said.

Though neither Viacom nor CBS officials would detail specific plans for the Internet properties of the combined company, they said the online properties are crucial to its future success. Sumner Redstone, Viacom's CEO, said the combined company "will be the No. 1 outlet on the planet for connecting advertisers with the audiences they need to reach."

"This is much more than just a collection of assets," Redstone said during the press conference, though he did point out that those assets will include Paramount Pictures, MTV, Nickelodeon, VH1, Blockbuster Video and Infinity Broadcasting. "I have long said that content is king. In this partnership, the product will be king in distribution, marketing and advertising, as well as content."

Asked how -- and whether -- the Internet operations would be fused, Redstone said officials of the two companies have only had "preliminary discussions" on that issue. "But for us, the Internet is not an add-on, it's a major growth business," he said.

The sites for the various CBS and Viacom properties represent "the No. 1 collection of Internet assets in the media industry," Redstone added.

The combined company will also focus on making its Internet brands stronger outside the United States, said Mel Karmazin, now CEO of CBS. Karmazin is to become chief operating officer of the new entity, to be known as Viacom. "We now have by far the best (Internet) distribution in the US, but we also want to be a global powerhouse, and we're on our way," Karmazin said. He noted that the MTV cable network's Web site has greatly expanded its overseas traffic.

Taken together, some 300 million households worldwide are reached by the combined Viacom and CBS television, film and radio companies, Redstone said. All those households are seen as potential visitors to the new company's online destinations, he said.

One analyst said he's not surprised that Viacom and CBS executives seem to see the Web chiefly as an advertising vehicle. "This is really not a dot com deal. It's a traditional media deal," said Bruce Leischtman, a media industry analyst at The Yankee Group in Boston. "Karmazin is an advertising guy from way back. It makes sense that right now, the Internet piece of the puzzle is focused on advertising."

Both CBS and Viacom have struggled with how to integrate their Web properties with their offline brands, Leischtman added. CBS has answered the challenge by "putting its name on everything", as with CBS MarketWatch, and so far the company's Web sites are doing well, he said.

But Viacom doesn't have the brand recognition that CBS has, he said. "Consumers don't know who Viacom is," Leischtman said. "So CBS brings that brand recognition to the table."

Viacom last month formed an online music division, dubbed MTV Interactive, to encompass VH1.com, MTV.com, and SonicNet. The company also plans to spin off an online property aimed at children, to incorporate its Nickelodeon Web site.

CBS, meanwhile, last month exchanged $62m in advertising and promotional support over five years for a 38 percent stake in the Jobs.com career Web site.

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