Viacom insiders say Bob Bakish’s rise in power is a good sign for employees going into the CBS merger, but some on Wall Street have doubts about the new leadership structure (CBS, VIAB)

Bob Bakish Viacom

  • Viacom’s Bob Bakish is rising in power. He has been chosen to lead ViacomCBS, the new company that would be created through the proposed merger of media companies CBS and Viacom.
  • Some Viacom staffers see the executive appointment as a “good thing for everyone at Viacom,” as one former employee told Business Insider ahead of the merger announcement.
  • While some Viacom employees are still concerned about layoffs, the move was generally considered a vote of confidence in Viacom’s turnaround efforts. 
  • Barclays analysts, however, said the leadership structure could create internal strife, as it also gives acting CBS CEO Joe Ianniello command of the robust CBS-branded assets.
  • “This is less than ideal,” Barclays wrote.
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CBS and Viacom agreed on Tuesday to merge their two companies and install Viacom CEO Bob Bakish at the helm of the combined organization.

Bakish would lead the company, to be called ViacomCBS, as president and CEO. Some Viacom employees who spoke to Business Insider before the deal was announced said that Bakish’s rise in power was an encouraging sign for their job prospects.

“The underlying feeling was, if Bob Bakish was to stay in power, then it would be a good thing for everyone at Viacom,” one former Viacom employee said.

Viacom — weighed down by a host of second-tier cable-TV channels like MTV, Nickelodeon, Comedy Central, and BET at a time when people are abandoning pay-TV subscriptions en masse — was initially seen as the weaker of the two companies.

CBS, worth about $28 billion in enterprise value compared to Viacom’s $20 billion, was more insulated from these sector shifts given that it has a major broadcast network, sports and news channels, premium-TV network Showtime, and budding streaming services including CBS All Access and Showtime.

Viacom’s standing had some staffers worried about layoffs and career advancement in the event of an acquisition.

Layoffs are common in any merger, and recent media tie-ups between companies like AT&T and WarnerMedia, and Disney and 21st Century Fox, have led to major reorganizations and staff changes.

But Bakish has done a lot to steer the ailing company in the right direction since becoming chief in 2016, improving its advertising business; acquiring the ad-supported streaming service, Pluto TV; and licensing content to third-party streaming services like Netflix, Hulu, and Facebook Watch. He rang in the company’s first quarter of domestic advertising growth in five years during its most-recent reported period.

In the process, Bakish has endeared himself to Shari Redstone, vice chair of both CBS’ and Viacom’s boards and president of National Amusements, the trust that holds a controlling stake in both companies.

Still, some teams within Viacom were still concerned about consolidation ahead of the merger announcement, based on Business Insider’s interviews with half a dozen current and former employees. 

Read more: INSIDE VIACOM: What employees are saying about the blockbuster CBS merger and think will happen next

But others saw Bakish’s appointment as a vote of confidence in the turnaround effort that staffers have worked hard to pull off under Bakish’s leadership. Bakish has also broadened Viacom’s international footprint, which is being considered a linchpin to the combined company’s expansion abroad.

“The idea that Bob could be leading does say a lot about Viacom’s international strength,” one current Viacom employee said. “It is why he rose to the top, I think.”

While Viacom employees may be happy to have Bakish run forthcoming ViacomCBS, some Wall Street analysts are worried the leadership structure CBS’ and Viacom’s boards have set up will create internal strife.

CBS’ acting CEO, Joe Ianniello, will continue to oversee CBS-branded assets including as its broadcast network as well as its news, sports, and digital-media properties, in a new role as CEO and chairman of CBS. Ianniello will command a big chunk of the future company’s revenue drivers. CBS Entertainment will make up about 38% of ViacomCBS’ 2020 revenue, Barclays estimated.

“While we understand the need for a compromise, this is less than ideal, in our view, and is likely to become a hurdle for truly integrating strategy across these assets,” analysts at Barclays wrote in a note on Tuesday, adding that Ianniello would be better suited as chief operating officer of the combined company. “The management structure is also likely to create unnecessary day-to-day operating friction as the CBS and Viacom silos and reporting structures are likely to skew incentives towards maintaining status quo.”

One such example of friction is at Showtime, a CBS asset that appears to be moving under Bakish’s oversight. David Nevins, Showtime’s CEO and chairman and CBS’ chief creative officer, will report to Bakish when the deal closes, but continue working with Ianniello on programming for CBS platforms, according to a memo sent by Ianniello to staff. 

SEE ALSO: INSIDE VIACOM: What employees are saying about the blockbuster CBS merger and think will happen next

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