Here’s the chart that explains why CBS and Viacom want to merge

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CBS and Viacom plan to merge and will set up a special committee to figure out how the combination would work for shareholders, both companies announced today.

Shari Redstone, who controls both companies, wanted to look at a possible deal in 2016, but then she said she changed her mind. Now she supports a merger.

Her family company, National Amusements, which controls both CBS and Viacom, said in a statement, “National Amusements supports the processes announced by CBS and Viacom to evaluate a combination of the two companies, which we believe has the potential to drive significant, long-term shareholder value.”

Redstone’s original argument for keeping the two companies apart was that Viacom, the once-mighty cable programmer that had fallen into disrepair, could improve on its own.

But even if Redstone believed that, it looks as though the rest of the media industry won’t wait for Viacom’s turnaround.

A series of proposed mergers, kicked off by AT&T’s planned acquisition of Time Warner, is forcing smaller media companies to look for larger homes. The operating theory: Programmers need to bulk up in order to get leverage with distributors — or find a distributor who just wants to buy them.

And while Viacom and CBS are giant media companies that reach tens of millions of people every night, by the standards of today’s media landscape, they’re comparatively small: Investors value CBS at $23 billion and Viacom at $14 billion. By comparison, Time Warner is worth some $72 billion, and Disney, which is worth $168 billion, is swallowing a big chunk of 21st Century Fox, which for now is worth $67 billion.

Here’s a visual representation of the market: We’ve grouped distributors and content companies by market cap, and highlighted some of their main lines of business. Note the digital guys on the right side of the chart — many people think Netflix, with its boom streaming business, is spurring some of this consolidation, and we’re still waiting to see if the truly big tech companies like Apple and Amazon enter the market for real.

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