The Viacom Inc. and CBS Corp. deal machines are revving up.
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The special committee of the board of Viacom has hired Morgan Stanley to explore a potential combination with CBS, people familiar with the matter say.
CBS's special committee, for its part, has retained Lazard as its financial adviser and Morton Pierce of White & Case as its legal counsel, the people say.
A spokeswoman for Morgan Stanley declined to comment. A Lazard spokeswoman had no immediate comment. Mr. Pierce declined to comment.
Given the struggles of Viacom's cable networks and movie studio, finding a valuation that both sides can live with will be one of the big challenges in pulling off a deal, and there will be plenty of work for the investment banking and law firm crowd.
A decade after splitting apart, Viacom and CBS were asked to consider merging last week by National Amusements, the Redstone family's holding company, which owns roughly 80% of the voting shares of both companies.
A reunion of the companies, which have a combined market capitalization of around $40 billion, would likely be the year's biggest media deal and a potential fee bonanza for advisers lucky enough to land a role.
Bankers who win business on a Viacom-CBS merger could also get close to the industry's newest mogul, Shari Redstone, who has risen to power in the media empire built up by her father, the 93-year-old Sumner Redstone. They would also likely be in strong position if the resulting entity went on the prowl for another big deal.
Viacom plans to hire a second financial advisor, the people familiar with the matter said. A number of financial and legal advisers could also be hired separately by CBS's management, people close to the situation say.
Morgan Stanley had previously worked for Viacom on a short-term basis last month, when it did a capital review along with LionTree Advisors.
Viacom has been trying to deal with a heavy debt load, even as low cable TV ratings and a lack of hits from its Paramount Pictures studio put pressure on its financial results.
The hiring of financial advisors comes just a week after CBS and Viacom set up special committees to review a potential deal.
The Viacom committee consists largely of new independent board members brought on in the wake of a fierce power struggle between the management of Viacom and the Redstone family. That struggle led to the departure of former Viacom Chief Executive Philippe Dauman and the ascension of Ms. Redstone.
Viacom's special committee includes Chairman Thomas May and Nicole Seligman, who are co-chairing the committee, as well as Kenneth Lerer, Judith McHale and Ronald Nelson. Charles Phillips is the only longtime Viacom director also serving on the committee, which last week announced it had hired Debevoise & Plimpton as legal counsel.
In National Amusements' letter to the boards, it said it believed "that a combination of CBS and Viacom might offer substantial synergies that would allow the combined company to respond even more aggressively and effectively to the challenges of the changing entertainment and media landscape." It also said that it would not consider an acquisition by a third party or giving up its controlling position.