CBS-Viacom merger talks back on delaying Moonves replacement

Talks heating up on a possible CBS-Viacom merger: Charlie Gasparino

FBN’s Charlie Gasparino says talks are heating up on a possible CBS-Viacom merger amid CBS’s search for a new CEO.

The on-again off-again merger talks between CBS Corporation and Viacom are now on-again, and have delayed CBS's naming of a new permanent CEO to succeed Les Moonves, FOX Business has learned.

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Merger discussions between the two media properties controlled by the Redstone family's holding company National Amusements, Inc. have been speculated about for at least two years, but were fiercely resisted by CBS when it was run by Moonves.

But with the longtime CBS chief ousted in September of last year over sexual misconduct allegations and six board members replaced, merger talks between the two media giants have begun once again, according to people with direct knowledge of the matter.

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In recent weeks, those merger talks have heated up, delaying the naming of Moonves' replacement until the future of the company is more certain, these people add.  At the moment, Moonves former number two, Joe Ianniello, is serving as interim CEO.

It remains unclear if the two companies will actually merge, according to people with direct knowledge of the matter and the timing of any deal is uncertain, these people add. But if they do combine, Viacom chief Bob Bakish is seen as having the inside track on the CEO job based on his close relationship with Shari Redstone, National Amusements President and Vice Chairwoman of both CBS Corporation and Viacom.

A spokesman for Viacom and CBS, as well as a spokeswoman for Shari Redstone had no comment, but wouldn't deny the merger discussions and their impact on the CBS CEO search.

Viacom and CBS are separate companies that were spun out of National Amusements in 2006; however, the Redstone family, led by the ailing media mogul Sumner Redstone maintains a controlling interest in both outfits. With her 95-year old father incapacitated, Shari Redstone, now essentially runs the conglomerate.

In 2016, Shari Redstone proposed merging the two companies-a move that was resisted by Moonves who feared a weaker Viacom would drag down the stronger CBS which was and continues to be a ratings leader, nabbing five of the top 10 television series, according to the company’s February earnings call.  In retaliation, Moonves sought to take away Redstone's controlling interest in CBS in order to either maintain independence or merge with another outfit other than Viacom.

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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. However, with Moonves' exit 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. 

CBS officials still haven't ruled out merging with a media outfit outside of Viacom or being bought by a bigger players, people with knowledge of the matter add. Another possible scenario: The combined CBS and Viacom could be bought by a bigger player looking for diverse content that would including CBSs programming and Viacom staples such as MTV and Nickelodeon.

CBS shares have gained 18 percent this year, slightly ahead of the S&P 500’s 16 percent rise.