Viacom, CBS Owner Said to Prepare Request to Study MergerBy
National Amusements said to plan letter to both boards
CBS CEO Les Moonves would have to revive MTV, Paramount
National Amusements Inc., the Redstones’ holding company, will request in a letter this week that the boards of Viacom and CBS establish independent committees to consider a combination, according to a person familiar with the matter. Banks are already jockeying to get hired by the companies, but no one has been contracted yet, said another person, who asked not to be identified discussing private information.
Shari Redstone, who has taken an active role in oversight of both companies with her 93-year-old father Sumner in frail health, has been considering a merger of CBS and Viacom to create a more powerful media empire, Bloomberg reported last month. But CBS shareholders may blanch at the idea of taking on Viacom’s struggling cable networks and movie studio.
CBS Chief Executive Officer Les Moonves said earlier this month the company isn’t in active discussions for a deal with Viacom, acknowledging the speculation that has been swirling about a merger ever since Shari Redstone emerged victorious in a battle for control of Viacom. Yet Moonves also said his executive team was capable of taking on a much larger challenge.
“Our guys could handle a lot more,” Moonves said. “They are very ambitious. They’re very aggressive.”
Reuters reported on National Amusements’ plans earlier Wednesday. Viacom shares rose as much as 5.4 percent before retreating. They were up 1.5 percent to $36.01 at 1:09 p.m. in New York. CBS was up 1.6 percent to $52.88 after rising as much as 4.6 percent earlier. Viacom declined to comment, and CBS didn’t immediately respond.
National Amusements owns 80 percent of the voting shares of both companies, which split in 2006. That controlling stake makes it difficult for minority shareholders to challenge a deal if the Redstones desire it. But 66-year-old Moonves, who has helped CBS solidify its status as the most-watched U.S. TV network, would put his legacy on the line by taking on the challenge of boosting ratings at struggling networks such as MTV and Comedy Central and turning around the sagging fortunes of movie studio Paramount Pictures.
Viacom would give CBS a broader portfolio of networks and give Moonves a rare opportunity to run a major Hollywood studio, which could make it easier to create and acquire programming. All of CBS’s major broadcast rivals -- ABC, NBC and Fox -- are part of corporations that include top film studios.
“NAI is requesting that the two companies EXPLORE this option -- which means (to us at least) that there is no ‘forcing’ a combination; and that CBS/Les Moonves clearly gets a say here,” Marci Ryvicker, an analyst at Wells Fargo & Co., said in a note Wednesday.
— With assistance by Alex Sherman, and Christopher Palmeri