CBS-Viacom talks near critical stage with Friday board meeting 

Shari Redstone could be chairwoman of combined CBS-Viacom company: Charlie Gasparino

FOX Business’ Charlie Gasparino reports that Shari Redstone could be the chairwoman of the combined CBS-Viacom company.

CBS Corp. and Viacom Inc. merger talks will likely reach a critical stage this week as the board of CBS meets to go over the discussions during its regularly scheduled gathering – a move that could result in an announcement on the status of the deal, FOX Business has learned.

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As FOX Business was first to report, the two companies have been engaged in preliminary merger discussions since mid-April, the latest attempt to combine the outfits controlled by the Redstone family's National Amusements Inc.

People with direct knowledge of the matter say the CBS board will take up the issue of the merger at the Friday meeting and may disclose details of the talks in its aftermath. Board members will likely review some of the topics that have been informally proposed during the preliminary talks, including – as FOX Business has reported – broad deal terms and management structure. The sources say Viacom CEO Robert Bakish is likely to emerge as the chief executive of the combined company over CBS chief Joe Ianniello, given his strong relationship with National Amusements president Shari Redstone, who is running the company for her ailing father, Sumner Redstone.

The merger talks are not yet complete and could conceivably be bogged down or called off as they have in the past, sources add. Deal terms and management structure may also change as the two side hash out various details, these people say.

But if the two media giants combine, they could have a market value of around $30 billion, making it a substantial competitor in the media space not just in terms of size, but also scope. Between the two of them, they boast some of the most popular news, major sports and entertainment programming in America, since CBS was and continues to be a ratings leader, nabbing five of the top 10 television series. Viacom controls broadcast staples such as MTV, Comedy Central, Nickelodeon and movie studio Paramount Pictures.

Spokesmen for CBS and Viacom declined to comment. A spokeswoman for National Amusements had no comment.

TickerSecurityLastChange%Chg
CBSCBS CORP.50.29-0.18-0.36%
VIAVIACOM INC.35.31-0.18-0.51%

Viacom and CBS are separate companies that were spun out of National Amusements in 2006, even as the Redstone entity maintained a controlling stake in each. A decade later, Shari Redstone proposed merging the two but talks ultimately broke down. Former CBS CEO Les 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 partner to strike a deal with before it would consider merging with Viacom. Redstone, meanwhile, couldn’t push for a merger until that time.

But with the longtime CBS chief Moonves ousted in September of last year over sexual misconduct allegations and six board members replaced, Shari Redstone's power within the media empire built by her father grew, and the merger talks restarted. Another factor in pushing the two sides to once again consider a combination: A lack of interest in CBS from deep-pocketed tech companies that are building their own content, these people say.

"This thing could happen this time," said a Wall Street executive with direct knowledge of the matter. "And if it does it will happen sooner rather than later." The executive said if the two sides agree on a deal, it could be consummated in late June or early July.

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People with knowledge of the preliminary discussions say bankers would attempt to structure the deal in most respects as a “merger of equals,” even though CBS is larger. CBS shareholders would likely get enhanced deal terms in the creation of the new company, these people say.

But management structure would likely favor Viacom; under one scenario being discussed, Bakish would have the inside track to be CEO of the new company, and Shari Redstone its chairwoman in addition to her role as president of the holding company. She is currently vice chair of CBS and Viacom.

If Bakish is named chief executive and the deal does go through, it’s unclear if Ianniello will stay through a transition period or leave immediately. Ianniello is contracted to stay at CBS until the end of 2019.