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CBS Finance Chief Faces Tough Job Merging With Viacom

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08/16/2019 | 05:48pm EDT

By Nina Trentmann

Christina Spade suddenly has a much bigger job. After less than a year as finance chief of CBS Corp., she will now shoulder the responsibility for managing the finances of ViacomCBS Inc.

Ms. Spade, in her first interview since being appointed finance chief of the entity that will combine CBS and Viacom Inc., said Friday that she relishes the challenge of helping shape the combined company.

"Half the battle in finance is to get a seat at the strategic table," Ms. Spade said.

She will have a full agenda before the closing of the all-stock deal, which is expected by the end of the year: Due diligence, merging the books, regulatory filings and tax planning.

And then there is the work that comes after the reunification of the companies that were split in 2006: Identifying and eliminating redundancies, budgeting and, perhaps the most challenging task, providing visibility into the company's future revenue streams, which are expected to become less predictable because of the outsize impact blockbuster films can have on the Viacom side of the deal.

"We have a bigger checkbook but we'll have to take a look at how we reprioritize our resources," Ms. Spade said.

The deal, announced Tuesday, combines a range of assets including MTV, Paramount, Nickelodeon, CBS's broadcast network and the Showtime premium network. ViacomCBS is expected to generate about $28 billion in revenue a year, the companies said. CBS alone reported $14.51 billion in revenue for the year ended Dec. 31, 2018.

"Ms. Spade will have to decide how to account for CBS's and Viacom's assets, which metrics to use and how to depreciate certain investments over time," said Robert Routh, a managing director at FBN Securities Inc.

The CFO will have to find $500 million in cost savings within a year or two of closing of the deal to meet the company's goal.

Ms. Spade said she would be looking at overlapping organizational structures as well as asking the company's vendors for bigger discounts. "If I do my job right, there are clearly going be more synergies" beyond the $500 million, she said.

Reducing the company's spending on content production and advertising would also contribute to achieving the synergies target, analysts said. CBS and Viacom together spent more than $13 billion on content creation in the past 12 months, according to the companies.

Still, the new company will have budget constraints, Ms. Spade said.

Ms. Spade worked at CBS's Showtime business for nearly 22 years, five of them as chief financial officer, before becoming the broadcaster's CFO in October. She is taking over reasonably healthy balance sheets, following efforts by departing Viacom CFO Wade Davis to bring down the company's debt level and to reduce costs, analysts said.

"There is a lot we have to do in a little bit of time," Ms. Spade said.

Forecasting revenue could become more difficult for Ms. Spade because of Viacom's large film business, where large investments are made without knowing what the exact return will be, and the companies' exposure to trends such as cord-cutting.

Ms. Spade could be more cautious in her communication with investors about revenue generated from films and cable networks than she has been in her current role, said Joseph Bonner, a senior analyst at Argus Research Co.

CBS is known among analysts for precise forecasts and detailed guidance. The management of the combined entity might remain more vague in its outlook until there is a better understanding of the revenue generated by the various parts of the business, Mr. Bonner said.

"Our goal with this integration is to give as much visibility as we can, " Ms. Spade said.

Depending on the budget and spending decisions that Ms. Spade and her new boss, Chief Executive Bob Bakish, make, the shape of the company's finances could look markedly different a year or two after the deal closes.

For a successful merger, executives including the finance chief need to understand the culture of both companies, and make sure they are compatible, said Jack McCullough, president of the CFO Leadership Council, an association for finance chiefs.

Ms. Spade said she is pursuing a collaborative management style that will help with the integration of the two businesses.

"It is sometimes more important to be a listener than a doer," Ms. Spade said.

Write to Nina Trentmann at Nina.Trentmann@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
CBS CORPORATION -2.28% 42.39 Delayed Quote.-3.04%
PARAMOUNT GROUP INC 0.46% 13.2 Delayed Quote.5.10%
VIACOM -2.14% 25.21 Delayed Quote.-1.91%
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Joseph R. Ianniello President & Chief Executive Officer
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