The king of all media may soon be a queen.
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Shari Redstone, the scion of the empire created by her ailing father Sumner Redstone, is on the verge of creating and heading as chairwoman a media colossus as her long-held goal of merging CBS Corp., and Viacom Inc., progresses toward a deal, according to people with direct knowledge of the matter.
The merger of the two companies – under the control of the Redstone’s National Amusement Inc. holding company – isn’t complete and talks could bog down or be called off as they have in the past, these people add. But progress by board members in developing a consensus on deal terms and management structure has picked up steam in recent days. An announcement of some type could be made in late June or early July, these people say.
The board would make the deal in most respects a “merger of equals” even though CBS is larger, and its shareholders would get enhanced deal terms in the creation of the new company.
Either way, the person who will come out on top and officially sit on the throne of the new empire will likely be Shari Redstone, the 65-year-old former corporate lawyer and daughter of the man who built one of America’s premier media outfits during his long years as a buyout specialist, these people add.
Under one scenario being discussed, Redstone could be named chairwoman of the combined entity, while Robert Bakish, the current CEO of Viacom, would likely be named CEO of the new company. The fate of the current CEO of CBS Joseph Ianniello, is unclear; these people say he may stay through a transition, or he could leave immediately.
Ianniello’s contract was extended, but only through 2019, raising doubts about whether he will stay through a transition or immediately leave the company if a merger happens, they add.
A spokeswoman for Shari Redstone declined comment as did a spokesman for CBS.
People close to the talks say they are cautiously optimistic that a deal will happen but given the personalities involved—some of the biggest executives in media and a volatile family at the helm of the holding company—hitches are likely and both sides could walk away empty handed.
Meanwhile, Shari Redstone, and her media mogul father Sumner, have had a fraught relationship in recent years. By 2016, Shari Redstone gained control of the empire from Sumner amid a series of lawsuits with a paramour of her father, and clear proof that the now 96-year-old Sumner was too incapacitated to run the outfit of which he remains, nominally, its chairman emeritus.
But if the deal does happen, Shari Redstone’s power over the company that Sumner built would be complete.
Since 2006, National Amusements has held a controlling interest in CBS and Viacom but both companies also have outside shareholders. That status gave the outfits, and CBS in particular, under the leadership of its former CEO Les Moonves, greater autonomy in corporate dealings. Moonves built CBS into a ratings and earnings powerhouse, and with that he earned near total autonomy.
But with the longtime CBS chief ousted in September of last year over sexual misconduct allegations and six board members replaced, the Redstones’ power will be near complete.
The combined outfits could have a market value of around $30 billion, making it a sizable competitors in the media space not just in terms of size but also scope. Shari Redstone would be the de-facto chief of some the most popular programming in America since CBS was and continues to be a ratings leader, nabbing five of the top 10 television series, including major sports and news programming. Viacom controls such broadcast staples as MTV, Comedy Central, Nickelodeon, and movie studio Paramount Pictures.
In April, FOX Business was first to report the on-again off-again merger talks between CBS and Viacom. The discussions between the two media properties have been speculated about for at least two years, but were fiercely resisted by CBS when it was run by Moonves.
While Viacom and CBS are separate companies that were spun out of National Amusements in 2006, in 2016, Shari Redstone proposed merging the two. Moonves feared the weaker Viacom would drag down the stronger CBS, and in retaliation, he sued to take away Redstone's controlling interest in CBS in order to either maintain independence or merge with another outfit other than Viacom.
The two sides eventually reached an agreement that gave CBS until September 2020 to possibly find another merger partner before it would consider merging with Viacom. Redstone, meanwhile, couldn’t push for a merger until that time.
But with Moonves' exit, Redstone’s enhanced power and a lack of interest in CBS from deep-pocketed tech companies that are building their own content, the merger with Viacom appears more likely according to people with knowledge of the matter.
The Moonves-Redstone imbroglio also damaged Ianniello’s chances for the top job since Ianniello was Moonves’ long-time No. 2, according to people with knowledge of the matter. That put Bakish–a Redstone confidant–in the top position to emerge as CEO of the new company if the deal is reached.
Analysts expect Bakish—or whomever is running the combined out—to trim costs and headcount, and prepare the new company for a possible sale at some point.
Bakish, as first reported by FOX Business, was recently snubbed by high-profile media investment bank Allen & Company, which chose not to invite him for a second year to its big media conference held in Sun Valley, Idaho every July. The reason, according to people close to Bakish: He complained to the Viacom board over some corporate financing work Allen & Co. did for Viacom.
An Allen & Co. media representative had no comment.