CBS Submits Viacom Bid, Signaling Start of Deal Talks

CBS Said to Make Lowball Offer for Viacom

CBS Corp. submitted its bid to acquire Viacom Inc., the owner of MTV and Comedy Central, according to a person with knowledge of the matter, opening negotiations that will decide the fate of the two media companies controlled by the Redstone family.

A special committee of five CBS board members put together the offer, which calls for CBS management to lead the recombined company. CBS is led by Leslie Moonves, chief executive officer, and his No. 2, Joseph Ianniello, chief operating officer.

CBS is offering a below-market value for Viacom shares, according to the person, who asked not to be identified discussing non-public deliberations. Viacom shares climbed following reports in early January that the companies again planned to explore a merger but have retreated more than 4 percent over the past couple days on reports of the possible terms.

An independent board committee at Viacom will now negotiate with its counterpart at CBS to agree on a price and operational structure that satisfies both sides. The companies aim to reach a deal before they report financial results in May, though the proposal offered no fixed timetable.

Viacom, also the owner of Paramount Pictures, was trading at $29.63 in late trading Tuesday, giving the company a market value of about $12.3 billion. CBS was up 4 percent to $52.74, valuing the equity at $20.2 billion.

Billionaire Sumner Redstone split CBS and Viacom in 2006, believing Viacom would be more valuable trading on its own. Yet Viacom’s suite of cable networks have sputtered in recent years and the stock has declined, while CBS has fared better, prompting Redstone’s daughter, Shari,to push for a reunion of the two properties.

“There is a clear bias for a deal to get done,” John Janedis, an analyst with Jefferies Group LLC, wrote in a note Monday. “The challenges on the traditional media distribution models are all very real.” However, bidding below market value “would would make it very difficult to consummate a deal.”

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