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Latest update (5/18) – CBS and Viacom are slowly moving closer to a merger deal and negotiations over price could start as soon as next month, an insider has told CNBC! A CBS spokesman declined to comment. CBS and Viacom are actively looking for scale to better compete with behemoths Netflix, Amazon, Comcast, Disney and AT&T’s WarnerMedia. The news follows CBS reportedly offering $5 billion to acquire Lions Gate’s premium cable channel Starz, however, the bid was rejected about two months ago. Still, executives at Lions Gate believe the company fits well within CBS and are open to the idea of selling to CBS or a combined CBS-Viacom at a higher price.

Latest update (4/16) – CBS Suspends CEO Search, Extends Acting Chief Joe Ianniello Through December

CBS has called off its search for a permanent CEO, at least through the end of this year, Deadline reports.

Joe Ianniello has agreed to an extension of his role as president and acting CEO for six additional months through December 31, and the CBS board has suspended the search after identifying a small group of finalists. The timing of the extension is opportune for CBS given the approaching upfront pitch to advertisers and the annual shareholder meeting, with both May events high-visibility showcases for the company.

The official announcement called the move “a testament to the accomplishments achieved by Ianniello” since he took the reins last September as the Les Moonves debacle rocked the company. Moonves departed after a long run at the company and as one of the most powerful executives in media after more than a dozen women accused him of sexual assault and harassment. As the longtime right-hand man of Moonves in the corporate suite, Ianniello has spent 22 years at the company, four of them as CFO. He engineered many of the retransmission and distribution deals that have kept CBS on a smooth financial track, especially as it pushes deeper into streaming.

While Ianniello lacked corner-office experience when he took the interim job and faced a formidable rebuilding task as well as the need to minister to the morale of the company and reassure partners across the board, he has earned high marks from Wall Street. That has made him a strong contender for the permanent CEO title despite a close association with Moonves, which could be considered an automatic handicap despite the lack of any direct personal implication in the Moonves scandal.

Investors initially shrugged at the news, with shares in CBS unchanged after hours. They moved fractionally higher during the regular trading day, closing at $51.34. That’s nearly $5 below where they were last September during the changing of the guard.

In a statement, CBS’ Board of Directors said: “Joe has demonstrated exceptional leadership during this time of unprecedented transition at CBS. He steadied the ship with some key appointments and a commitment to cultural change, and steered it forward by focusing CBS’ operations around its growing direct-to-consumer strategy. We are very pleased to recognize Joe’s talents and efforts with this extension, and we look forward to all that he’ll continue to do to build on CBS’ remarkable momentum.”

The CEO news also comes amid intensifying merger speculation about CBS and Viacom, who share a common controlling shareholder, National Amusements. Preliminary talks have been initiated, sources have indicated to Deadline, though they are not at a formal stage.

Under the terms of a legal settlement reached between National Amusements and CBS last fall, NAI is not allowed to launch any discussions, though the individual companies could initiate on their own. With AT&T gobbling up Time Warner and Disney grabbing most of Fox and tech giants continuing to throw considerable weight around, the sense for some time has been that both CBS and Viacom need more scale to survive. The two companies were under the same corporate roof from 2000 to 2006.

Ianniello has played a significant role in the merger discussions, two rounds of which yielded no deal. In negotiations with Moonves, NAI chief Shari Redstone favored Viacom CEO Bob Bakish for a top leadership position, with Moonves slated to run the combined company. Moonves, meanwhile, insisted that Ianniello had to have a senior role.

Previous update (4/16) –

Talks heating up on a possible CBS-Viacom merger

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 Opens a New Window. are now on-again, and have delayed CBS’s naming of a new permanent CEO to succeed Les Moonves, FOX Business has learned.

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.

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.

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.

Previous updates:

Latest update (1/30) – From Bloomberg:

CBS Board Meets to Weigh Deal as Viacom Finds Its Footing

– Rebound at Viacom strengthens hand of its CEO, Bob Bakish
– That could mean sweeter terms for MTV’s owner in a merger

When Viacom Inc. was weighing a merger with CBS Corp. last year, it didn’t seem like Chief Executive Officer Bob Bakish was negotiating from a position of strength.

Viacom’s Nickelodeon and MTV networks were losing viewers to Netflix Inc. and YouTube, and its Paramount Pictures studio was bleeding red ink. CBS, meanwhile, had the most-watched network and star CEO Les Moonves. Its board didn’t want Bakish in a top role: Moonves should take the helm, with his top deputy Joe Ianniello assuming the No. 2 spot.

That was then. When CBS directors led by interim Chairman Strauss Zelnick meet in Los Angeles Thursday, the board will be eyeing a reinvigorated Viacom, basking in fresh growth. At CBS, Moonves is gone — ousted in September after a dozen women leveled accusations of sexual misconduct — and the company is weighing whether to make interim CEO Ianniello its permanent chief.

That puts Bakish, 55, in a far stronger position to lead the combined company as CBS considers rekindling merger talks for the third time in as many years. The board discussion, which is expected to canvass other options besides just a Viacom deal, will be informed by work already carried out by CBS’s bankers, said people with knowledge of the matter.

‘It’s on Us’

That was hardly the case last May when Bakish, in the job for less than two years, held a town-hall meeting with staff after a second round of talks with CBS faltered. The message was clear: If anyone was going to save the company, it would have to be Viacom itself.

“I want you to realize one thing — it’s on us,” Bakish said at the media group’s headquarters in New York’s Times Square. “Viacom’s future — our future — will be overwhelmingly shaped by what we do,” he told staff, according to people who attended the presentation.

Since then, Bakish and his team have acquired two direct-to-consumer video platforms — Pluto TV and Awesomeness TV — giving the company a bigger foothold in online television. Viacom signed a deal to sell movies to Netflix and has begun rebuilding its studio business, with the aim of more than doubling revenue to $1 billion by producing more content for others.

Share Gain

Viacom’s share price is up almost 12 percent this year, compared with about 5 percent for the broader market. CBS is enjoying its own resurgence as the Moonves cloud lifts: Its shares have climbed 15 percent.

Assuming the CBS board decides that a combination with Viacom is the best bet, it’s worth remembering that the two companies — controlled by Shari Redstone and her family’s National Amusements Inc. — had already agreed to the economic terms for a merger. The deal was forecast to generate as much as $1 billion in cost benefits.

Last year’s discussions fell apart because of a dispute over who would lead the combined company. Moonves also was leading an effort to strip the Redstones of their approximate 80 percent voting stake. The family also controls about 80 percent of Viacom, its other major media holding, after splitting the two companies more than a decade ago.

Viacom directors, who had agreed to take 0.6135 CBS share for every nonvoting share of their company, are likely to push for more if negotiations resume, people familiar with the matter said. And with CBS searching for a permanent CEO, Bakish may emerge as a top contender to lead the combined group.

CBS has enlisted executive-recruiting firm Korn/Ferry to help find a new leader. Experience with big mergers is one criterion they have discussed. A CBS representative is said to have reached out to potential candidates, including former Walt Disney Co. Chief Operating Officer Tom Staggs.

‘Less Bad’

To be sure, not everyone is convinced that Viacom is CBS’s best option. Sanford C. Bernstein & Co. analyst Todd Juenger thinks Discovery Inc. or AMC Networks Inc. could be “less bad” as merger partners. CBS still runs the most-watched network in the U.S. and now boasts than 6 million paying online subscribers — with plans to reach 8 million by year-end. It might be better off selling itself, he speculated.

But some CBS investors who had resisted the idea of a merger with a weaker Viacom are starting to come around.

“Bob’s done an extremely good job,” said Kevin Lee Hon Sion, a portfolio manager and analyst at Letko Brosseau & Associates Inc. in Montreal, a shareholder in CBS. “With CBS, the audience skews older. Add the MTVs, Nickelodeons and BETs of the world, and it becomes more powerful. You can put together Paramount and the CBS TV studio, you become a very strong provider of content.”

More Mergers?

And the dealmaking might not stop there. National Amusements has previously said it would be open to a second transaction that would give the combined CBS-Viacom more scale to compete with the digital media giants that have wreaked havoc on traditional broadcasters.

That could mean a combination with other content players such as Discovery, Lions Gate Entertainment Corp. or the entertainment arm of Sony Corp.

To underscore just how much things have changed for Viacom, Bakish recently spoke on Bloomberg Television after acquiring Pluto TV — an ad-supported online video service. Viacom, once seen as the weak link in a deal, “absolutely” doesn’t need to merge with CBS to prosper, he said.

“We cemented our turnaround in ’18,” said Bakish, who’s been with Viacom since 1997. “We’re now leaning hard into the evolution of our company, growing our opportunity.”


Latest update (1/9/2019): A permanent replacement for Les Moonves may have to wait until CBS and Viacom become one company again, Deadline is reporting.

The quest to find a full-time CEO has lost some of its intensity over the holidays as a consensus is emerging among CBS board members and power players to take a renewed look into melding the media outlet with its former parent company, I hear.

“It’s simply not as important now who runs CBS when you consider that a newly constructed leadership team will be required down the line if talks are successful,” one insider told Deadline of the impetus towards renewing merger discussions.

That may be good news as well as providing some additional leg room for acting CEO Joe Ianniello. If preliminary merger talks were to begin in the coming weeks, ex-CFO Ianniello is well positioned to put his financial expertise to use in settling terms and potentially shine in the process, I hear.

The former Moonves top lieutenant has generally received good marks from corporate America and Wall Street since taking over after Moonves resigned in September as more and more allegations of sexual misconduct became public.

Ex-Disney executive Tom Staggs, former Turner CEO John Martin and now departed CBS executives Nancy Tellem and Nina Tassler have also been mentioned as possible CEO choices in recent months. Showtime kingpin and recently appointed CBS chief creative officer David Nevins has seen his name bandied about too. For candidates inside and outside, CBS brought on executive search firm Korn Ferry last fall.

But despite Viacom CEO Bob Bakish’s assertion late last year that the company isn’t “focused on a big, transformational deal,” a merger is much more on the menu now than finding a new CBS boss.

While Shari Redstone and her family’s National Amusements holding company pledged last summer amid a struggle for corporate control to hold off for two years on pushing for any new Viacom deal, there is nothing to stop the recently reconfigured CBS board from instigating such a move. Board members are set to meet in the coming weeks with merger on the minds of many, sources close to the action confirm.

“This discussion has never really gone away despite the difficulties of last year,” another source says of talks between CBS and the home of Paramount Pictures, BET, Comedy Central, MTV and Nickelodeon. “Look at Disney and Fox, AT&T and Warner Bros — the marketplace realities demand we bulk up, so it’s all about finding the most strategic and successful outcome.”

CBS has a current market value of $18 billion and Viacom’s is nearly $12 billion – small numbers compared with Disney and AT&T.

Of course, not far from any outcome of merger talks and a possible bigger job is Viacom’s Bakish, who is close to Redstone. In fact, it was Moonves’ stubborn reluctance to give Bakish — who took over Viacom from short-term interim boss Tom Dooley in October 2016 — a significant position in any newly merged company that effectively kneecapped further negotiations last year.

Had he not been so cantankerous and set off the subsequent legal and board-room battles with the now victorious Redstone, Moonves seemed set to have been the CEO of a consolidated company. He even might have weathered the forthcoming scandals and allegations with her support – which he clearly lacked in the summer.

Both CBS and Viacom saw their stock prices rise modestly Tuesday along with the broader markets on a day that started with 95-year old Sumner Redstone ending the long and invasive legal battle with his ex-companion Manuela Herzer. The mogul’s settlement comes less than a week before a potentially messy trial was to start in Los Angeles Superior Court.

Most media and tech shares advanced on a day when the Dow and the Nasdaq both finished up 1%. Viacom shares gained 2% to $28.71, while CBS rose 1.5% to $48.37. Both stocks are toward the lower end of their 52-week ranges.

As its stock went up, CBS declined comment today on possible merger talks or the status of the CEO search.


Latest update (1/7/2019): It’s not spring yet, but CBS is already signaling its urge to merge with Viacom.

The TV-broadcasting giant, looking to replace its disgraced ex-chief executive Les Moonves, has been telling leading job candidates that it’s looking for somebody who can run not only CBS but also Viacom if the two companies are merged, The New York Post has learned.

In September, National Amusements — the holding company owned by ailing billionaire Sumner Redstone that controls both CBS and Viacom through its majority stakes — agreed in a settlement not to approach CBS for two years about a merger with Viacom, the media giant that owns Nickelodeon, Comedy Central, MTV and Paramount Pictures.

Nevertheless, nothing is keeping CBS — whose board got reshuffled last fall by media heiress Shari Redstone — from initiating talks.

The new CBS board is expected to do just that as soon as this month, with ambitions to close a deal by March or April — and possibly announce a permanent CEO for the combined companies along with a merger, sources briefed on the talks said.

“Shari [Redstone] had indicated twice in the past she wanted a merger but Les was in the way,” a source who knows Redstone well said. “[Interim CEO] Joe Ianniello is a terrific guy but he doesn’t have the standing to do anything but cooperate.”

Despite publicity around its high-profile search to replace Moonves — ousted last fall amid a slew of sexual-harassment allegations — insiders say it’s still early in the process. Headhunting agency Korn Ferry, which is advising CBS on the search, has not yet interviewed candidates, or even submitted a list of possibilities to the board, two sources said.

Instead, sources say Redstone has reached out to potential candidates in recent months through informal discussions with the help of personal advisers, sources said.

Reports that Disney’s ex-operating chief, Thomas Staggs, is the runaway favorite are premature, according to sources. Other leading contenders include ex-Time Warner execs John Martin and Olaf Olafsson, and Hasbro CEO Brian Goldner, sources said.

Another possibility, according to one source, is Viacom CEO Bob Bakish, a favorite of Redstone who has won praise for his recent progress on a turnaround.

“If Les had agreed [last year] to buy Viacom and have Bakish as his No. 2, I believe Bob would have been CEO of both companies by now,” the source said.

As reported by The Post, CBS’s interim chairman Strauss Zelnick, the CEO of gaming giant Take-Two Interactive, has also been considered for the job. Although Zelnick has reportedly taken himself out of the running, insiders said that could change.

Naming a CEO for CBS and Viacom at the time of the merger would be a big plus for selling the deal to Wall Street, insiders noted. Still, hiring a CBS CEO with the promise they will run the combined company is tricky until the merger is agreed upon.

One potential candidate has made it clear he would want a guaranteed payout if he took the CBS job and didn’t end up running the combined CBS and Viacom, a source briefed on the process said.

Despite last year’s pushback from Moonves, a CBS-Viacom merger increasingly makes sense as media giants continue to consolidate, said Brett Harriss of Gabelli & Co, whose affiliate GAMCO Investors, is the largest independent shareholder in both CBS and Viacom.

“If it ends up being a merger of equals, assuming $1 billion of synergies, I think it’s pretty good,” Harriss told The Post.

CBS could use Viacom programming to boost its new streaming service, Harriss said, and synergies could add as much as $20 a share to CBS’s stock, which closed on Friday at $47.17. A CBS-Viacom tie-up also would make it harder for cable companies to drop Viacom’s channels.

CBS declined to comment.

Latest (11/19): Surprise – the CBS-Viacom merger could be a few months away, insiders say!

Not only is Stephen Colbert moving in with SpongeBob SquarePants, they’ll stay up all night playing “Grand Theft Auto” together.

That, at least, is shorthand for one of the surprising media-merger scenarios that’s getting pitched as Colbert’s network, CBS, gears up for talks with Viacom, the owner of “SpongeBob” broadcaster Nickelodeon, The New York Post has learned.

After CBS boss Les Moonves departed the network amid sexual-assault allegations in September, insiders said the TV giant’s board could announce a merger with Viacom in the next three to six months — a deal that Moonves had fiercely resisted.

“I would be surprised if we are sitting around in March and CBS and Viacom are not combined,” said one media executive close to the situation.

The source noted that the pressure to merge has intensified with the tie-ups between Fox and Disney and AT&T and Time Warner. An auction of CBS, meanwhile, has failed to attract other bidders.

But that’s not the only deal that media heir Shari Redstone — who controls CBS and Viacom through her ailing father Sumner Redstone’s holding company National Amusements Inc. — is weighing after reshuffling CBS’s board, sources say.

Another possibility is a three-way merger that also adds Take-Two Interactive, the video-gaming giant that owns the “Grand Theft Auto” franchise, according to insiders.

Redstone’s longtime ally, Dick Parsons, abruptly stepped down as CBS interim chairman last month, citing health reasons. That prompted Redstone to replace Parsons with another friendly mogul — Strauss Zelnick.

The 61-year-old fitness fan, who has been chief executive of Take-Two for the past decade, now looks like a leading candidate to lead CBS and Viacom once they’re combined — possibly as their CEO, according to sources. That’s despite a hunt to replace Moonves that’s being run by executive-search firm Korn Ferry and is including candidates as diverse as ex-Disney exec Tom Staggs, former CBS exec Nina Tassler and HBO boss Richard Plepler, sources said.

Part of Zelnick’s appeal is his control over Take-Two, whose gaming franchises include the newly released blockbuster “Red Dead Redemption 2.” Bernstein analyst Todd Juenger recently argued that gaming companies are increasingly becoming takeover targets for traditional media firms.

“Video game publishers are net cash [as opposed to highly leveraged], put forth an entertainment product which is perfectly suited for young people and growing in engagement [as opposed to the opposite],” Juenger wrote in a research note.

While a Take-Two deal is far from assured, a source close to the situation said it nevertheless “could happen” as Redstone looks for ways to bulk up her holdings to compete with far bigger rivals.

“That’s what we call a triple bank shot,” the source added, noting that it’s still early days in negotiations.

Nevertheless, some insiders believe Zelnick has the savvy, the track record and the connections to make it happen. After attending Harvard Law School with former Sony exec Nicole Seligman — a longtime Viacom board member who is seen by some as Redstone’s closest adviser — Zelnick became the youngest-ever exec to head the 20th Century Fox Hollywood studio at age 32.

The brash wunderkind went on to run music powerhouse BMG Entertainment in the 1990s, only to leave in a clash with his corporate bosses. He then started Zelnick Media, an investment firm focused on smaller tech and media assets currently valued at $14 billion.

After leading an investor-staged takeover of Take-Two in 2007, Zelnick became chairman and CEO and the largest single shareholder of the video-game firm, which, today, has a market cap of just under $13 billion.

Zelnick declined to comment, but on a Take-Two conference call with analysts this month, he sought to quash rumors that he’s in the running for the CBS CEO job.

“The CBS role is specifically interim and non-executive,” Zelnick said. “So, you have to think of it as a board seat with a responsibility to convene meetings. Take-Two is where my head and my heart remains.”

To some insiders, Zelnick’s lawyerly comments sidestepped the fact that he’s hoping that he won’t have to leave Take-Two behind as he makes his comeback bid for the helm of CBS and Viacom.

“Strauss is very close to Shari and he’s the new chairman. I would look for him to maneuver. He’ll be CEO,” one source said. “It’s a package deal. He’s dying to run it.”

Reps for CBS and Viacom declined to comment, as did Zelnick and a rep for Redstone.


Also, from The Wrap:

Why a CBS and Viacom Merger Is Looking Likely in Early 2019

Viacom CEO Bob Bakish would make the most sense to lead the combined company, according to BTIG analyst Rich Greenfield

A merger of CBS and sister company Viacom that has been hovering in corporate and legal limbo for roughly three years may now happen during the first six months of this year, industry experts say.

“I would be surprised if this merger doesn’t happen during the first half of the year, maybe even the first quarter,” CFRA Research analyst Tuna Amobi told TheWrap.

Analysts note that one of the chief obstacles to the long-proposed deal — former CBS CEO and chairman Les Moonves — is now out of the picture following his firing for cause late last year after multiple accusations of sexual misconduct.

Since the idea of a merger began gaining traction in 2016, Moonves all but launched a corporate and legal siege to block any attempts to combine the two companies by Shari’s Redstone’s National Amusements Inc., the privately held family firm that controls roughly 80 percent of the voting power in both companies (which had split into separate companies in 2005).

“We never expected CBS’ Les Moonves to fight a transaction that would have benefited CBS and Viacom shareholders and enabled the combined company to lead the consolidation wave in legacy media, versus trail it,” BTIG analyst Rich Greenfield wrote in a blog post earlier this week. “With Moonves now gone, we expect Viacom and CBS to merge in early 2019.”

That effort wouldn’t come from National Amusements, which has repeatedly pressed the two companies to consider reteaming. As part of Moonves’ ouster last September and the settlement of lawsuits over corporate governance with the CBS board of directors, National Amusements agreed that it would not pursue a merger for two years.

CBS and Viacom could still seek a merger if two-thirds of the board members who aren’t affiliated with National Amusements request it.

“When [the CBS board] opposed the merger last year, it wasn’t because the justification for it wasn’t there, but because of all the noise and push-and-pull with the governance issues,” Amobi said. “Folks assumed that it could take two years before we heard anything about a merger; it was lost that the CBS board would look at this and revisit it.

“National Amusements can’t initiate a merger, but it was likely something very much in the back of their minds when making those board appointments.”

The CBS board is currently facing some major question marks. For example, the company needs to decide whether to hire an outside CEO or promote Ianniello to the job beyond interim status; analysts have been uncertain whether he’d be a permanent fit.

In late December, The Wall Street Journal reported former Disney COO Tom Staggs — who had once been tapped as the heir apparent to Disney chief Bob Iger — had emerged as a candidate to permanently fill the role. The Journal also listed Hasbro CEO Brian Goldner and Starz COO Jeffrey Hirsch as potential candidates.

But in the event of a CBS-Viacom merger, analysts suspect that Viacom CEO Bob Bakish — who has made strides to improve the company’s performance since taking over in late 2016 — would make the most sense to lead the newly recombined companies.

“Rather than name a new CEO, we believe CBS’ board of directors should reopen merger discussions with Viacom immediately,” Greenfield wrote. “We would expect the management team of the combined company to be led by current Viacom CEO, Bob Bakish, and current Viacom CFO, Wade Davis, with Shari Redstone likely to take the chairperson role.”

Greenfield has argued in the past that the future of a combined Viacom and CBS would be driven by an increased focus on international and scaling up. Before taking the reins at Viacom, Bakish spent roughly a decade overseeing various international operations at the company, including in January 2011 being promoted to president and CEO of Viacom International Media Networks.

Recent multibillion-dollar deals such as Disney’s acquisition of the majority of Fox’s TV and film entertainment assets and AT&T’s acquisition of Time Warner speak volumes to the exponential importance of scale in the media and entertainment industry.

A CBS merger with Viacom could be a vital step in achieving scale for both companies and, importantly, their shareholders. According to Greenfield, however, it likely wouldn’t end there.

“Following the merger, look for the new Viacom-CBS combined company to focus on scaling up to better compete with the industry behemoths,” he wrote. “Assets such as Discovery, Lionsgate, MGM, Sony TV/Film, etc. could all be of interest in 2020 and beyond.”

While CBS has consistently been at or near the top in broadcast ratings, the company’s yearly revenue and net income has remained roughly stagnant over the last five years. In 2017, the last full-year financials CBS has reported, the company reported that revenue was down more than 10 percent compared with 2013. And 2017’s net income declined roughly 30 percent over that time frame.

Meanwhile, Viacom has been in rebuild mode since Bakish took over from former boss Philippe Dauman in 2016, has been attempting to stabilize its business. The company’s fiscal annual revenue has remained relatively steady, dipping roughly 6 percent in 2016 from the previous year, but annual net income has rebounded significantly since 2016 when income slid more than 25 percent compared with the previous year.

In 2017, income bounced back more than 30 percent, though in the 2018 fiscal year, there was a roughly 10 percent decline in net income.

According to Bakish though, Viacom isn’t banking on an M&A deal to save them, despite having put serious consideration into reteaming with CBS last year. The Viacom CEO told Variety that while they’ve thought about it, they can’t be sure what’s going to happen.

“The rationale for bringing these two companies together is still there. What I’ve heard, talking to investors, there are some institutional holders that think the time is now,” Amobi said. “There’s speculation that it could be top of the agenda at the upcoming board meeting.”


From Bloomberg:

CBS Board to Prepare for Merger Talk at Its January Meeting

– Possiblity of Viacom deal has loomed since Moonves’s exit

– Interim CBS chairman Strauss Zelnick will lead deliberations

When CBS Corp. board members go to Los Angeles for their Jan. 31 meeting, they’ll have more on the agenda than just a tour of the local TV studios.

The 11-member panel is expected to discuss both the hunt for a permanent chief executive officer and the possibility of a merger with Viacom Inc., according to people familiar with the situation. The directors are likely to ask CBS’s financial advisers to look at strategic options — including, but not limited to, a possible Viacom deal — said the people, who asked not to be identified because the deliberations are private. A decision on whether to pursue a tie-up could come within weeks.

The possibility of a Viacom deal has been the elephant in the room since the departure in September of longtime CEO Les Moonves, who was fired after allegations of sexual harassment and assault. He had opposed the merger — a move long championed by the Redstone family, which controls both companies — because of concerns about who would manage the combined business. Since the ouster, Joe Ianniello, formerly Moonves’s deputy, has been running CBS as acting CEO.

Independent Directors
At the time of Moonves’s departure, the Redstones agreed to not propose a combination again for at least two years, but there’s nothing stopping the independent directors of both companies from seeking a transaction.

CBS declined to comment, while Viacom didn’t immediately respond to a request for comment.

The New York Post reported earlier this week that CBS’s board may renew Viacom talks as soon as this month, with the hopes of sealing a deal by March or April.

A deal would reunite the owner of the most-watched broadcast TV network last year with Viacom’s film-and-cable empire, which includes the Paramount Pictures studio, MTV and Nickelodeon. They had been the same company until a split more than a decade ago.

In more recent years, they’ve been pursuing somewhat different strategies. To adapt to the streaming era, CBS launched its own monthly subscription service, CBS All Access, while Viacom has been signing content production deals with services such as Netflix Inc.

Board Changes
The past four months have been a period of upheaval for New York-based CBS. A board shake-up has brought six new members, and they have spent time getting acquainted with the company and its culture.

Ianniello, meanwhile, has been trying to put his imprint on the media giant. The executive is a contender to become permanent CEO — depending on the course CBS takes in the coming months — and he wants to show that the company has turned a page after the Moonves scandal.

That’s included appointing more women to top roles. He named Laurie Rosenfield chief people officer in October and put Susan Zirinsky in charge of CBS News this week. Zirinsky, an inspiration behind Holly Hunter’s character in “Broadcast News,” is overseeing an organization with its own record of misconduct. Jeff Fager, a “60 Minutes” executive producer who previously ran the news department, was fired in September for violating company policies. In 2017, CBS terminated longtime TV personality Charlie Rose over allegations of harassment.

Recruiting Efforts

For the CEO search, executive-recruiting firm Korn/Ferry International has been interviewing board members to gauge what they want in a new chief. Experience with big mergers is one criterion they have discussed. A CBS representative is said to have been reaching out to some potential candidates, including former Walt Disney Co. Chief Operating Officer Tom Staggs. A list of contenders is unlikely to be presented at the meeting this month, however.

Strauss Zelnick, a friend of Shari Redstone and the CEO of video-game maker Take-Two Interactive Software Inc., stepped in to be interim chairman of the company in October. He’s expected to take a lead role in discussions of a possible merger. Zelnick has said he’s not interested in serving as CEO of the combined companies, but he hasn’t commented on whether he might stay on a permanent chairman.

Viacom CEO Bob Bakish would be a leading contender to run a combined business.

If a deal is proposed, it could be a speedier process than the last time, when subcommittees of the boards of both companies were formed to explore the combination. At the time, the boards agreed on economic terms — the price was a ratio of 0.6135 CBS share for every Viacom Class B share. A deal will require the approval of two-thirds of the independent directors.


Latest (5/31): CBS stockholders have filed a class-action lawsuit (read it HERE) against the media company’s controlling shareholder, National Amusements, contending the Shari Redstone-run outfit has breached its fiduciary duty, reports Deadline.

The suit was filed in Delaware Chancery Court by the Westmoreland County Employees Retirement System. (Westmoreland County is in Pennsylvania, just east of Pittsburgh.) It contends that the execs in charge of NAI, which controls about 80% of CBS and Viacom, “breached and continue to breach contractual, implied obligations and fiduciary duties that they owe to CBS’s Class B stockholders.” The NAI control is achieved via a dual-class stock ownership structure, a setup commonly used by many startup companies and even at some mature ones, such as Facebook.

The retirement fund is seeking certification for class action status on behalf of all of CBS’s Class B shareholders. Lawyers for the pension fund argue that CBS’s board had the authority to issue a special dividend, as was the case earlier this month, when the majority of the board voted to dilute Shari Redstone’s voting control over the company.

In its suit, the fund accuses NAI chief Shari Redstone, the family’s National Amusements holding company, and two board members of harming Class B shareholders by interfering with this special dividend. “The Share Distribution Provision permits share distributions that are dilutive to the excessive voting power of the Class A,” the complaint says. “Sumner Redstone is no longer in control of CBS. His daughter has seized control, interfered with the management of the company and pressured the company to pursue her self-interested plan to combine CBS with Viacom.”

National Amusements issued a statement saying it was merely exercising its legal right to change the CBS bylaws.

“Furthermore, as detailed in NAI’s complaint, the efforts of the CBS Directors to unilaterally dilute the voting rights of its controlling shareholder are extraordinary, unjustified and unlawful,” the company said in a statement. “We are confident the court will uphold NAI’s action.”
The pension fund’s lawyers argue that Redstone and her allies broke their promise to act in good faith by using National Amusement’s controlling stake in CBS to effectively nullify the board’s vote through a last-minute bylaw change.

“This denies the Class B stockholders the protection that the Share Distribution Provision was intended to afford them against an overreaching controlling shareholder,” the lawyers argue.

The pension fund argues that the bylaw change, requiring approval of 90% of the board to issue such a dividend, is invalid for reasons similar to those cited by CBS’s attorneys. The lawyers are asking the Delaware Chancery to authorize the issuance of new, Class A voting stock to all CBS shareholder and find Redstone, NAI and board members David Andelman and Robert Klieger in breach of their fiduciary duties.

One recent report by a Western Pennsylvania newspaper said the pension fund serves 1,300 retired government workers and ended 2017 with $459 million.

The action by shareholders is the latest attempt to challenge the bylaws that give NAI, control of the company. CBS, in a special board meeting May 17, voted to overturn the bylaws and reduce NAI’s control to around 20%, after first taking NAI to court, seeking a temporary restraining order to prevent interference with the board vote. NAI then sued over that move.

Courtroom battles have not interfered with Shari Redstone’s efforts to lead CBS and Viacom through a challenging environment for traditional media companies. She was seen earlier this week casually chatting with attendees at the Code Conference, a prominent technology and entertainment conference in Rancho Palos Verdes.

All of the legal warfare has deep roots, but it has flared up in recent weeks after two attempts by Redstone to bring the companies back together amid overall industry consolidation. One effort at a reunion in 2016 was abandoned. The next, which began in January, led to the current meltdown. Both sets of talks ran aground over issues over managerial control and compensation, with CBS chief Les Moonves resisting efforts to install current Viacom CEO Bob Bakish as the No. 2 in a combined entity. A larger point of contention is that CBS has insisted that Redstone was trying to force a merger regardless of the downside. NAI emphatically denies that charge.

CBS declined to comment on the suit. NAI did not immediately respond to Deadline’s request for comment.

National Amusements was founded as a Boston-area theater circuit in 1936 by the father of longtime former CBS and Viacom chairman Sumner Redstone, who took the helm of the company in 1954. Redstone would eventually expand the regional exhibitor into a global media power. During his six-decade run, the company bought Viacom in a bare-knuckled battle that involved Barry Diller, and then acquired CBS in 1999. CBS and Viacom operated together until deciding to split in 2006. Initially, the thinking behind the divorce was that then-high-flying Viacom, with Paramount Pictures, MTV and Nickelodeon, had too much upside to be weighed down by broadcast-and-localTV-heavy CBS. Stock-wise and operationally, it turned out to be the opposite scenario. Under Moonves, CBS went on a tear that continues to this day, topping the ratings charts and unlocking more shareholder value than Viacom, making Moonves and many shareholders wary of a combination with Viacom and newly critical of the NAI bylaws.

Shari Redstone, who earlier this decade had become estranged from her father, reconciled after the grueling process of ousting former Viacom CEO Philippe Dauman. With the health of Sumner Redstone, 95, now fading, Shari Redstone has steered the family-owned company since 2016.

Latest (5/29): Extraordinary – and disturbing – revelations emerged Tuesday (May 29) about the tense — and, at times, allegedly physical — closed-door meetings between senior executives at CBS and Viacom, which remain locked in a battle over a potential merger, reports NBC News. Legal filings describe how Shari Redstone, one of the most powerful women in media, was reportedly manhandled by Charles Gifford, a member of the CBS board, with Gifford “grabbing her face and directing her to listen to him.”

Redstone, 64, who is vice chairman of CBS and Viacom and the daughter of the ailing media mogul Sumner Redstone, is under fire from CBS, which claims that National Amusements, the holding company that retains 80 percent of the voting shares in CBS and Viacom, was usurping its role by trying to force a merger of the two and potentially replace CBS board members.

Redstone suggested that Gifford, for one, not be renominated. After one meeting got physical, according to the filing, Gifford later told Redstone that he had meant no offense, adding “that was how he treats his daughters when he wants their attention.” Redstone said she responded that “she was not Mr. Gifford’s daughter but instead the vice chair of CBS.”

CBS, which was once tied to Viacom but separated in 2006, is trying to dilute National Amusements’ control and prevent a potential merger. National Amusements fired back by changing CBS bylaws to prevent a potential dilution of its voting stock. The two parties are now in court.

The filings on Tuesday by National Amusements in Delaware Chancery Court called CBS’ efforts to dilute its voting rights “unprecedented, unjustified and unlawful.”

The filings also revealed that Redstone would likely have given up her controlling stake in both companies had the merger been approved, noting that Redstone had told CBS Chief Executive Les Moonves that National Amusements “would consider relinquishing its controlling interest in the context of such a transaction.”

CBS’ holdings include broadcast network CBS, premium pay channel Showtime, and book publisher Simon and Schuster; while Viacom, run by chief executive Bob Bakish, owns cable channels including MTV and Nickelodeon, and Paramount movie studios.

In a statement Tuesday, NAI said, “Earlier this year, Shari Redstone and Les Moonves discussed and agreed that recombining CBS and Viacom would benefit both companies’ shareholders, providing greater scale as needed for success in today’s media and entertainment landscape, and better positioning the companies for a larger transaction in which the combined entity could fetch an attractive premium that neither CBS nor Viacom alone could command.”

Redstone later agreed that the two companies could not be merged, and Moonves, who grew “tired of having to deal with a stockholder with voting control” took “particular umbrage that the exercise of such stockholder’s control has migrated from Sumner Redstone to his daughter, Ms. Redstone,” according to the statement.

Sumner Redstone, who is 95, stepped back from day-to-day duties at CBS and Viacom, though he remains chief executive of NAI.

The filing also noted that Moonves has the right to terminate his own employment agreement and stands to make $180 million if he has “certain good reason” for doing so.

“Today’s reactive complaint from NAI was not unexpected,” CBS said in a statement. “The amended complaint filed last week by CBS and its Special Committee details the ways in which NAI misused its power to the detriment of CBS shareholders, and was submitted after careful deliberation by all involved. We continue to believe firmly in our position.”


Also, from TheWrap:

National Amusements Says It ‘No Longer Supported’ CBS-Viacom Merger Before CBS’ ‘Unlawful’ Move

Shari Redstone fires back in latest salvo to Les Moonves’ attempts to dilute her family company’s voting control of media giant

Shari Redstone said on Tuesday that she and her family’s company, National Amusements Inc., “no longer supported” a Viacom-CBS merger and communicated that to the Viacom board before CBS’ board made an “unprecedented” move to strip her of her voting power over the media giant.

In a new complaint in the muddy battle for power at CBS, Redstone said that National Amusements had advised Viacom’s special committee that it “no longer supported” a merger between the two companies. And that this was before CBS filed a lawsuit against Redstone and attempted to dilute NAI’s voting power from nearly 80 percent to roughly 80 percent.

The basis for CBS’ suit against Redstone and National Amusements, which has voting control of both CBS and Viacom, is the concern that Redstone would go to what it deems harmful lengths, such as replacing board members, in order to force a merger with Viacom.

“Today’s reactive complaint from [National Amusements] was not unexpected,” CBS said in a statement. “The amended complaint filed last week by CBS and its special committee details the ways in which NAI misused its power to the detriment of CBS shareholders, and was submitted after careful deliberation by all involved. We continue to believe firmly in our position.”

CBS has said that a merger would not be in the fiduciary interest of shareholders. Redstone has deemed the board’s concerns unfounded — and that its move to issue dividends to dilute NAI’s control was “unprecedented, unjustified and unlawful.”

“[National Amusements] and Shari Redstone did not, and do not, intend to force a recombination of CBS and Viacom, whether by removing and replacing CBS directors or otherwise,” National Amusements said in a statement on Tuesday. “In fact, prior to CBS’s action, Shari Redstone had already determined and advised a special committee of Viacom’s board that NAI no longer supported a merger.”

In National Amusements’ complaint, filed in Delaware court on Tuesday, the company said that as merger talks began to break down toward the end of April, Redstone reached out to members of Viacom’s special committee to tell them she was questioning the viability of and continuing rationale for a CBS-Viacom merger.

CBS CEO Les Moonves’ reluctance to carve out a role for Viacom head Bob Bakish in the combined company coupled with press reports that inside CBS sources were disparaging Viacom gave Redstone doubts about the merger. Viacom’s special committee, however, told her a recombination still made sense, according to the complaint.

On May 14, along with filing a lawsuit against Redstone, CBS said it had decided to longer pursue a merger with Viacom. This came after the two sides had agreed to go “pencils down,” putting a pause to merger talks due to busy schedules that included the CBS network’s upfront presentation to advertisers, the complaint says.

“As [National Amusements’] complaint makes clear there was no ‘threat’ or ‘interference,’ and indeed there was no action that could possibly warrant the CBS directors’ unprecedented, unjustified, and unlawful efforts to unilaterally dilute NAI’s voting rights,” National Amusements said in its statement. “Unlike CBS’ complaint, NAI’s complaint is based on actual facts. Those facts demonstrate that CBS’ allegations are false, and that the CBS board and special committee took their actions not in response to any genuine threat, but instead because Les Moonves has tired of having a controlling shareholder.

“While Les Moonves is an extremely capable television executive, neither he, nor the board acting at his behest, is entitled to strip NAI of its voting control.”


Latest (5/24): CBS said media heiress Shari Redstone’s recent moves to keep an iron grip on the company’s board have been “disloyal” — including an alleged maneuver to block a potential acquirer of the broadcasting giant.

In an amended lawsuit on Wednesday, CBS claimed Redstone — who is pushing for CBS to merge with Viacom, whose board she also controls — had warned off an unnamed rival suitor from bidding for CBS, reports The New York Post.

“Ms. Redstone told the CEO of a potential acquirer of CBS that he should not make such an offer,” according to the amended complaint filed in Delaware Chancery Court.

That, in turn, deprived CBS stockholders of “a potentially value-enhancing opportunity that the board or the special committee should have been free to evaluate, even if to use as negotiating leverage in connection with discussions concerning Viacom,” according to the suit.

In Wednesday’s suit, CBS also gripes that Redstone — whose holding company National Amusements owns 80 percent of CBS voting shares — cheated shareholders when she issued a bylaws change last Wednesday that requires a 90 percent vote of the CBS board to approve a special dividend.

CBS, which devised the dividend to dilute Redstone’s voting power to 17 percent, filed a lawsuit earlier last week that attempted to protect the dividend plan, which was approved 11-3 last Thursday in a special board meeting.

A Delaware judge, however, has yet to approve the dividend.

“National Amusements exercised its legal right to amend CBS’ bylaws and this change was effective immediately. We are confident the court will uphold NAI’s action,” a spokeswoman for Redstone said.

CBS on Wednesday alleged that under Redstone, National Amusements has “acted to undermine the management team, including without board authority, talking to potential CEO replacements, deriding the chief operating officer, and threatening to change the board.”

The epic legal spat pits Redstone against CBS CEO Les Mooves, who seeks autonomy to run the combined companies.

In the lawsuit, CBS said its directors were forced to adopt the dilution plan to block the unwanted merger on Redstone’s terms. A CBS special committee has rejected Redstone’s merger offer.

Also, from AFP:

CBS board challenges Redstone control in amended lawsuit

Washington (AFP) – CBS filed a new complaint Wednesday seeking to wrest control of the media group from controlling shareholder Shari Redstone, accusing her of trying “reap private benefits” at the expense of other stockholders.

The revised complaint from the CBS board of directors comes days after a judge backed Redstone and rejected an effort by the board to block her from interfering with an evaluation of a potential merger with media rival Viacom.

The lawsuit in Delaware Chancery Court claims that Shari Redstone, acting for her father Sumner Redstone through the family holding company National Amusements Inc, appears intent on pressing ahead with the deal for Viacom, which she also controls.

CBS asked the court to nullify Redstone’s change in the bylaws which would require 90 percent approval by the shareholders, allowing her to effectively veto any board action.

The complaint said that despite her promises to the contrary, Redstone is on a path to reunite CBS and Viacom, which split in 2005, and could use her supermajority in voting shares to replace board members opposing her.

The family holding company owns around 10 percent of the equity of CBS but its special voting shares give it approximately 80 percent of the voting power. A similar plan is in effect at Viacom.

“She has sought to combine CBS and Viacom regardless of the strategic and economic merits of the transaction and to the exclusion of considering any other potential transaction,” the complaint said.

It added that a special committee formed to consider the deal determined earlier this month “that a CBS/Viacom merger is not in the best interests of CBS stockholders” other than the Redstone family.

Shari Redstone and National Amusements, according to the complaint, have violated their fiduciary duty to shareholders by their actions.

They have failed, the suit continued, to live up to the “uncompromising duties of loyalty and good faith that preclude them from profiting inequitably at the expense of the company or its other public stockholders.”

National Amusements, which has defended the corporate structure, said in response the latest filing that it “exercised its legal right to amend CBS’ bylaws and this change was effective immediately.”

“We are confident the court will uphold NAI’s action,” the statement added.

The lawsuit is the latest drama involving the media-entertainment empire built by Sumner Redstone, 94, whose fitness and mental status have been questioned in legal proceedings.

A separate legal clash ended in 2016 when Viacom chief Philippe Dauman agreed to step down and drop his lawsuit alleging a power grab by Shari Redstone in the absence of her incapacitated father.

CBS, which operates one of the largest US broadcast TV network, the Showtime channel and controls Australia’s Network Ten, has resisted efforts to merge with struggling Viacom, whose brands include Nickelodeon, MTV, BET and Comedy Central and Paramount Pictures.


Latest (5/18): Shari Redstone won the first round Thursday (17th May 2018) of a messy legal battle for control of CBS Corp, but the media group said the fight is not over yet.

A Delaware judge rejected a petition from the CBS board of directors to block the Redstone family’s holding company from interfering with the evaluation of any merger deal.

The decision allows Shari Redstone — daughter of media empire builder Sumner Redstone — to keep tight control over the television and media group, with the power to replace its board.

It also could clear the way for CBS to reunite with rival Viacom, although the Redstones’ National Amusements Inc holding firm has said it is not seeking to force a tie-up.

CBS had sought to block any effort by Redstone and National Amusements to meddle with the board ahead of a planned meeting where it was to consider a measure to dilute her voting shares.

Delaware Chancery Court judge Andre Bouchard said CBS failed to show it would suffer “irreparable” harm if its petition were denied.

“I am not convinced that the harm plaintiffs fear would be irreparable,” Bouchard said in a 17-page opinion.

“To the contrary, the court has extensive power to provide redress if Ms Redstone takes action(s) inconsistent with the fiduciary obligations owed by a controlling stockholder.”

National Amusements welcomed the ruling, saying the judge blocked an “unprecedented motion to try to deprive a shareholder of its fundamental voting rights.”

“The court’s ruling today represents a vindication of National Amusements’ right to protect its interests,” said the holding company led by Shari Redstone, who controls the shares for her ailing 94-year-old father.

A CBS statement said the judge did not rule out a potential legal claim against Redstone for failing to act in the interest of shareholders.

“While we are disappointed that the judge did not grant a (restraining order), the ruling clearly recognizes that we may bring further legal action to challenge any actions by NAI that we consider to be unlawful, and we will do so,” CBS said.

CBS pointed out that the judge wrote in his order that the media firm may be able to present “a colorable claim for breach of fiduciary duty against Ms Redstone.”

– Future clouded at CBS –

The court fight brought into the open the power struggle between Shari Redstone and CBS chief Les Moonves.

CBS had claimed that Redstone was seeking to force a merger with Viacom — which is also controlled by the family and which was split from CBS in 2006 — on terms that were unfavorable to public CBS shareholders.

The Redstone holding company controls about 10 percent of the equity of CBS but has nearly 80 percent of the voting power through a special share class.

National Amusements has disputed the claim by CBS that it wants a merger without the support of both firms.

But the open clash is likely to lead to major shakeup at CBS in the event of a merger with Viacom. CBS shares sank around four percent following the ruling.

“Ultimately, we believe it is hard to imagine Moonves having a role in the combined company,” BTIG Research analyst Richard Greenfield said in a note to clients this week.

“We have a hard time seeing how any of the independent CBS directors in addition to Moonves, can be allowed to stay, given they are actively seeking to violate National Amusement’s shareholder rights under the CBS bylaws.”

CBS divisions include its large US broadcast television network, Network Ten Australia, Showtime Networks and the publisher Simon & Schuster, among others.

Viacom operates the Paramount studios in Hollywood, along with cable channels Nickelodeon, MTV and Comedy Central, and has content agreements with TV operators in Britain, Argentina and India.

The lawsuit is the latest drama involving the media-entertainment empire built by Sumner Redstone, whose fitness and mental status have been questioned in legal proceedings.

In a separate legal clash in 2016, Shari Redstone was accused of manipulating her incapacitated father to gain control of the media empire.

Additionally, CBS Corp.’s board on Thursday voted in favor of a dividend that would reduce the voting power that Viacom and CBS controlling shareholder National Amusements has at the latter, and it suspended its annual shareholder meeting that was scheduled for Friday. The company had on Monday sued its vice chair Shari Redstone, her father Sumner Redstone and the vehicle through which the Redstone family had controlled CBS and Viacom.

The company said it was “a unanimous vote of the directors not affiliated with National Amusements” and that the plan for dilution is still subject to court approval.

What the directors, did, specifically, was declare a dividend of 0.5687 shares of Class A common stock for each share of the company’s Class A and Class B stock, which will mean that National Amusements will control about 17 percent voting control over CBS rather than 80 percent.

CBS, led by chairman and CEO Leslie Moonves, had on Monday filed a lawsuit in Delaware Chancery Court against its vice chair Shari Redstone, her father Sumner Redstone and the Redstone family’s National Amusements. It said back then that a committee of independent directors at the company called for the Thursday board meeting to formally vote on the potential Viacom deal and possibly decide on issuing a dividend that would dilute NA’s voting stake from approximately 79 percent to 17 percent.

With the expectation that the Redstones may attempt to interfere with the planned meeting, CBS in a preemptive measure demanded a temporary restraining order from a Delaware judge, which the judge denied on Thursday.

“The special committee believes that the company and its public stockholders face a serious threat of imminent, irreparable harm in Ms. Redstone’s potential response to the special committee’s unanimous decision … May 12, 2018, that the proposed Viacom transaction is not in the best interests of CBS stockholders,” the CBS motion had said.

NA called CBS’ move “outrageous” and said it would vigorously defend itself in court. After Thursday’s court decision, it said: “We are pleased by the court’s decision to deny CBS and its special committee’s unprecedented motion to try to deprive a shareholder of its fundamental voting rights. The court’s ruling today represents a vindication of National Amusements’ right to protect its interests. As we intend to demonstrate as the case proceeds, the actions of CBS and its special committee amount to a grievous breach of fiduciary duties and show no regard for the significant risk posed to CBS and its investors.”

CBS said after the court decision: “While we are disappointed that the judge did not grant a temporary restraining order, the ruling clearly recognizes that we may bring further legal action to challenge any actions by NA that we consider to be unlawful, and we will do so.”

It added: “As previously announced, the CBS board will hold a meeting at 5 p.m. today to consider declaring a dividend of shares of Class A common stock to all of the company’s Class A and Class B stockholders, as is permitted under CBS’ charter. This dividend would more closely align economic and voting interests of CBS stockholders without diluting the economic interests of any stockholder.”

Also, from ZlotoNews:

CBS loses initial battle with shareholder

Shari Redstone wants to merge CBS with Viacom, another National Amusements company

The US media company CBS has lost an initial court battle amid a dispute with its biggest shareholder over control of the company.

A Delaware judge on Thursday lifted a temporary restraining order against National Amusements, which is owned by the Redstone family.

The ruling is expected to prevent CBS from taking steps to reduce National Amusement’s voting power.

CBS said it was disappointed but said it would continue its fight.

It said: “The ruling clearly recognises that we may bring further legal action to challenge any actions by [National Amusements] that we consider to be unlawful, and we will do so.”

Tensions between the two sides were triggered by Shari Redstone’s efforts to merge CBS with Viacom, another National Amusements company.

This week, a CBS committee decided the proposal was not in the firm’s interest. The company also announced plans to consider reducing National Amusement’s voting power by issuing a special dividend at a meeting on Thursday.

The firm argued that Ms Redstone’s interference in the merger process and other actions posed “significant threat of irreparable and irreversible harm” to CBS.

CBS had sought a temporary restraining order against National Amusements ahead of the meeting, arguing that Ms Redstone would block the plan to reduce her voting power by changing the board or its bylaws.

However, Delaware Chancery Court Chancellor Andre Bouchard said “a truly extraordinary set of circumstances would be necessary to grant such a request”.

“I am not convinced that the harm plaintiffs fear would be irreparable,” he wrote.

“To the contrary, the court has extensive power to provide redress if Ms Redstone takes action(s) inconsistent with the fiduciary obligations owed by a controlling stockholder.”

Despite the ruling, CBS said it would hold the meeting as planned.

‘Unprecedented motion’
National Amusements, which operates movie theatres in the US, UK and Latin America, controls about 80% of the voting power at both CBS and Viacom through a dual share class structure. The firm’s ownership stake is lower.

After CBS filed the lawsuit, National Amusements moved to amend the board’s bylaws, requiring a supermajority for certain measures.

National Amusements said the judge’s decision was “a vindication of National Amusements’ right to protect its interests.”

It said: “We are pleased by the court’s decision to deny CBS and its special committee’s unprecedented motion to try to deprive a shareholder of its fundamental voting rights.”

Viacom and CBS were previously part of the same company, but Sumner Redstone, Shari’s father, separated the two firms in 2005.

CBS subsidiaries include its flagship television network, television studios and the Simon & Schuster publishing firm.

Viacom includes Paramount, as well as media brands such as Nickelodeon, Comedy Central and MTV.

CBS shares plummeted after the decision,


Also, from The New York Times:

Judge Rejects CBS Move to Strip Shari Redstone’s Control of Company

A Delaware judge on Thursday handed a victory to Shari Redstone in her dispute with CBS, the television network controlled by her family, but left the door open for further courtroom battles in a bitter, and unusually public, boardroom feud.

The decision was a blow to CBS’s chief executive, Leslie Moonves, a highly paid and well- respected media mogul who has long resisted Ms. Redstone’s quest to merge his company with its corporate sibling, Viacom. Still, the decision left a door open for CBS to challenge future moves by its main shareholder.

The ruling, by Chancellor Andre G. Bouchard of Delaware’s Court of Chancery, denied CBS’s request for a temporary restraining order against Ms. Redstone. CBS had sought to prevent her from interfering with a board meeting scheduled for 5 p.m. Thursday at which board members were to vote on a special stock dividend that would have reduced her voting stake to 17 percent from 79 percent.

In suing Ms. Redstone, her father, Sumner M. Redstone, and their company, National Amusements, which owns CBS and Viacom, CBS argued that Ms. Redstone could seek to replace the company’s current directors with her allies in a maneuver similar to one she previously executed at Viacom. (Ms. Redstone, through her family’s holding company, denied considering such a move at CBS.)

Chancellor Bouchard’s ruling came amid a whirlwind week when the tension between CBS and its owner erupted into all-out war. On Monday, CBS sued Ms. Redstone, asking the court for the temporary restraining order. On Wednesday, less than an hour before the hearing in Delaware was to begin, Ms. Redstone moved to amend CBS’s bylaws to effectively give her control of the board.

In his decision, the judge wrote that CBS would have other legal avenues to challenge Ms. Redstone if the network believed that she had violated its independence.

“I am not convinced that the harm plaintiffs fear would be irreparable,” Chancellor Bouchard wrote. “To the contrary, the court has extensive power to provide redress if Ms. Redstone takes action(s) inconsistent with the fiduciary obligations owed by a controlling stockholder.”

In a statement, National Amusements said, “We are pleased by the court’s decision to deny CBS and its special committee’s unprecedented motion to try to deprive a shareholder of its fundamental voting rights. The court’s ruling today represents a vindication of National Amusements’ right to protect its interests. As we intend to demonstrate as the case proceeds, the actions of CBS and its special committee amount to a grievous breach of fiduciary duties and show no regard for the significant risk posed to CBS and its investors.”

CBS, in its own statement, said that although it was disappointed by the outcome, “the ruling clearly recognizes that we may bring further legal action to challenge any actions by N.A.I. that we consider to be unlawful, and we will do so. We remain confident that we will prevail in the lawsuit previously filed by CBS and the members of its Special Committee.

As for the board meeting scheduled for Thursday, CBS said it would proceed as planned.


Latest (5/17): Redstones abruptly change CBS’ bylaws an hour before court hearing as struggle for control continues, reports The Los Angeles Times (H/T: Valdosta Daily Times).

In a day of high drama even for the media industry’s most combative family, Shari Redstone spent Wednesday furiously trying to outmaneuver CBS in a brawl for control of the storied media company.

The day ended in a Delaware courtroom where the judge, Chancellor Andre G. Bouchard, issued a protective order to prevent further changes to CBS or its board, according to a person close to the situation who was not authorized to comment.

About an hour before the hearing, the Redstone family, through its investment vehicle, National Amusements Inc., said it had amended CBS’ bylaws to stipulate that any changes or authorizations of dividends would require a supermajority of board members. The move appeared aimed at preventing the board from voting Thursday to weaken the Redstones’ hold over the company. They are locked in a dispute with CBS over a proposed merger with Viacom.

The high-stakes showdown came after several months of behind-the-scenes tensions between Leslie Moonves, CBS’ chairman and chief executive, and Shari Redstone, the daughter of Sumner Redstone who also serves as vice chair of CBS.

Shari Redstone wants to merge CBS with another media company the family controls, Viacom, which owns MTV, Comedy Central, BET and Nickelodeon. CBS does not want to be saddled with the troubles of the weaker Viacom, and on Sunday a special committee of the CBS board determined that such a merger was not in the company’s best interest.

That conclusion was a rebuff to Redstone, who believes the two companies would be stronger together as traditional media compete with such technology giants as Facebook, Google, Netflix and Amazon.

The judge is expected to swiftly decide whether CBS can move forward with a rare corporate maneuver to strip the Redstone family of their control over the company, treating them like ordinary shareholders.

CBS has planned to hold a special board meeting Thursday to issue a dividend that would dilute the Redstones’ control over the company’s affairs. The family’s voting stock would be reduced from nearly 80% of the shareholder vote to 17%.

CBS said there was a provision in its charter that allows for such a dividend. It asked the judge to block the Redstones from making any changes to its board before Thursday’s vote could take effect.

“National Amusements Inc. believes the irresponsible action taken by CBS and its special committee put in motion a chain of events that poses significant risk to CBS,” the Redstone family said in a statement midday Wednesday. “Due to the magnitude of this threat, NAI was compelled to take this measured step to protect its position while also mitigating further disruption to CBS.”

CBS has said it feared that the Redstone family would unilaterally make changes that would harm CBS shareholders. The Redstones’ bylaws change reinforces the company’s concerns, CBS said.

“The latest step by NAI provides further evidence of why we concluded that we had no choice but to file our action in the Delaware courts, in order to protect the interests of all CBS shareholders,” CBS said in a statement after the bylaws change.

CBS sued the Redstone family Monday, alleging that Shari Redstone was trying to force a merger with Viacom Inc. even if it would harm CBS shareholders.

The Redstones filed a brief in the case late Tuesday, calling CBS’ attempts to eliminate their voting control “egregiously overbroad and unjustified” and said the move would be “an unprecedented usurpation of a controlling stockholder’s voting power.”

The Redstones’ National Amusements asked the judge to deny CBS’ request to block the Redstones from making changes at CBS before Thursday’s board meeting.

There is deep distrust on both sides. Moonves has bristled over media reports that Shari Redstone has been conducting a stealth search to replace him.

Moonves prides himself on his successful 12-year run managing the broadcasting company with little management oversight from the Redstones. But that changed in the last two years as the family patriarch, Sumner Redstone, who turns 95 next week, became ill and Shari Redstone began taking a more active role in Viacom and CBS.

Legal experts have called CBS’ gambit to dilute the Redstones’ power the “nuclear option.” The Redstone family told the judge that such a severe remedy was not warranted, saying there was no clear evidence that Shari Redstone planned to make changes to the board.

National Amusements called CBS’ effort “extraordinary both in scope and finality in response to unsupported allegations.”

“NAI does not have, and has never had, any intention of replacing the CBS board or taking other action to force a merger,” the company said in its Tuesday brief.

According to National Amusements, CBS has overreacted based on “unsourced media reports,” that have cited knowledgeable people who have said that Shari Redstone was prepared to replace CBS board members with ones that were aligned with her views.

CBS, in a response filed Wednesday morning, said it “was not seeing ghosts.”

“Five independent directors of undisputed renown — former CEOs and senior business executives along with the former dean of Harvard Law School — determined that [Shari Redstone] was such a serious threat to the corporation and all its stockholders that their fiduciary duties required action,” CBS said in its court papers.

Shari Redstone already has one close ally on the CBS board: Robert Klieger, a Los Angeles attorney who served as Sumner Redstone’s personal lawyer when the patriarch was sued by a former female companion. Klieger successfully represented Sumner Redstone in that fraught 2016 court case when the former companion, Manuela Herzer, tried to get Sumner Redstone declared mentally incapacitated. In 2017, Klieger joined the CBS board.

Last Friday, Klieger approached another board member, Bruce Gordon, and said National Amusements wanted a third board member, Charles Gifford, removed from the board before CBS’ annual shareholders meeting Friday. In its brief, National Amusements said it had concerns with Gifford that stemmed from unspecified “incidents” that occurred in 2016 and 2017. (Gifford, 75, is a former Boston banker who has served as chairman emeritus of Bank of America Corp. since 2005.)

Earlier this week, National Amusements said the board member, whom it now revealed as Gifford, had engaged in “bullying and intimidation.”

Gifford was not immediately available for comment. CBS defended Gifford on Wednesday, saying in a statement that he has “always conducted himself with courtesy, integrity and staunch dedication to all of our shareholders.”

“It is unfortunate and revealing that NAI has resorted to baseless personal attacks against a member of CBS’ board,” CBS said in its statement. “The allegations regarding him are not only vague and unsubstantiated, they are utterly inconsistent with our knowledge of him.”

CBS noted that Shari Redstone had previously supported Gifford’s involvement in an important CBS board committee. In addition, six weeks ago, National Amusements said in a regulatory filing that it planned to support the reelection of all current CBS board members, including Gifford.

The corporate wrangling comes just two years after National Amusements unilaterally made sweeping changes to Viacom’s board — moves that were announced via a fax that arrived in the office of Viacom’s then-chief executive late one Friday in May 2016.

That dispute also wound up in a Delaware court, and Viacom Chief Executive Philippe Dauman eventually resigned. That helped clear the decks for Shari Redstone to install Bob Bakish as the new chief executive of Viacom.

Talks about a Viacom-CBS merger broke down over her push to have Bakish serve in an influential role at the combined company.


1:45 p.m.: This article was updated with a Delaware judge issuing an order to prevent further changes to CBS or its board.

11:50 a.m.: This article was updated with a statement from CBS about the Redstone family’s bylaws changes.

11 a.m.: This article was updated with the Redstone family’s move to amend CBS bylaws.

9 a.m.: This article was updated with CBS’ Wednesday filing and statement and with additional background information.

This article was originally published at 7:25 a.m.


Latest (5/15): Les Moonves, CEO of CBS, privately concedes that his fight to wrestle control of the broadcast outfit from Shari Redstone could end with its sale to another player in the rapidly evolving media business, FOX Business has learned.

Insiders at CBS say a priority is achieving victory over Shari and her father, Sumner, who own a controlling stake through their holding company, National Amusements Inc. But these same insiders say Moonves is well aware of the challenges CBS will face as an independent company, given its relatively small size compared with the likes of Comcast, or if the courts allow, the proposed combination of AT&T and Time Warner.

With that in mind, Moonves will be open to a merger or being sold if the price is right. “Les knows what’s happening in the media industry,” said one CBS insider. “And he knows if he prevails here he could be sold.”

On Wednesday, a Delaware Chancery Court judge will hear arguments from CBS, which filed an unusual and explosive lawsuit earlier this week against the Redstones to dilute their controlling stake. The suit came after a contentious round of negotiations in which Shari Redstone was looking to merge CBS with the other media company the family controls, the ailing Viacom unit of National Amusements. Moonves has balked over price and her management demands.

Moonves plans a CBS board vote on Thursday to complete the dilution and strip control of the broadcaster from the Redstones. One CBS insider told FOX Business: “Les would never have even considered buying Viacom if Shari didn’t force this on him.”

The bold move by Moonves took the media industry by surprise, and if he’s successful, the outcome could have wide-ranging implications not just in the media business, but throughout corporate America. The lawsuit essentially puts the Chancery Court—which is regarded as the top legal venue for adjudicating more prosaic corporate disputes—in the position of determining something that is considered nearly unprecedented: Who is the rightful owner of a family company in a dispute between a controlling shareholder and management.

“The Delaware court usually doesn’t want to get involved in ownership disputes of this nature,” said a long-time media executive, who spoke on condition of anonymity. “They want to make sure parties are merely following the rules. They don’t want to get involved in a family-type dispute.”

In a statement, National Amusements said it “is outraged by the action taken by CBS and strongly refuted its characterization of the events.” The company said it was not forcing CBS to merge with Viacom and that a possible deal seemed to be on track until Moonves filed the lawsuit. The Redstones believe that Moonves filed the suit to protect an unnamed board member from being ousted over “incidents of bullying and intimation.”

A spokeswoman for National Amusements declined any further comment, but FOX Business has learned through another company executive that National Amusements is planning to make its own filing with the Delaware court sometime on Tuesday. This executive wouldn’t rule out that the Redstones could fire CBS board members to prevent Moonves’ move to dilute National Amusements’ control over CBS.

But people close to Moonves believe he’s got a strong legal case to make: Namely that Viacom’s assets – which include entertainment networks like Nickelodeon and MTV, are inferior to CBS’s entertainment and news programming and that Redstone was forcing a sale at inflated prices.

And Moonves is also thinking long-term, the people add: As the drama plays out in court and in the boardroom, Moonves and his management team have weighed the possibility of CBS being purchased or merged with another company, according to two CBS insiders with direct knowledge of the matter.

A CBS spokesman declined to comment on the matter but would not deny Moonves’ thinking as characterized by the insiders.

People familiar with Moonves’ priorities said at least for the near term the 68-year-old CEO wants to run CBS as a standalone outfit and to leverage its premium entertainment and news programming. He is in the middle of a long-term growth plan and has been reaching internal benchmarks.

Investors have rewarded the company by snapping up its shares, which have climbed more than 10% over the past five years. Viacom has been a market laggard, with its stock losing half its value.

That said, people in Moonves’ inner circle acknowledge that if he prevails over Redstone, his company would immediately become takeover bait for large technology companies such as Apple or even Google or Verizon, which have enormous amounts of cash on hand for such a purchase and are looking for various forms of content.

Given the rapidly changing media business, where even profitable companies such as CBS are coming under cost pressure because of the phenomenon known as cord cutting, CBS would have to consider a merger partner if and when one comes along, these people added.

“Verizon has already expressed interest in CBS,” Porter Bibb, managing partner of Mediatech Capital Partners, told FOX Business, adding that the telecom giant would probably prefer a combined CBS and Viacom because together the media titans are “worth at least 50% more than the two standalones would get individually.”

The first order of business for Moonves is prevailing over the Redstones. Shari Redstone took the reins of National Amusements as the health of her 94-year-old father declined. She has sought to consolidate power, first by pushing out Philippe Dauman as Viacom CEO and then by attempting to reunite Viacom with CBS.

Moonves has resisted the merger for the past two years, openly suggesting that he would rather be fired than be forced to buy Viacom at what he thought was an inflated price. He has also balked at her management demands including a push to install Viacom CEO Robert Bakish as the No. 2 at the combined company.

But Moonves believes he has a good hand in opposing his nominal boss. First, if Redstone fired him, Moonves would walk out with an enormous pay package estimated anywhere from $150 million to $200 million.

And from a legal standpoint, he believes CBS bylaws allow him to oppose mandates from the controlling investors if they are not in the best interest of most CBS shareholders. While the Redstones hold a controlling interest in CBS, they don’t own most of its stock. It is Moonves’ intention to dilute the family’s controlling stake to the point that it will vote like any other shareholder.

“Les believes he’s got all the cards in this one,” said a CBS executive. “If he loses and gets fired, he walks away even richer. If he wins, he is a hero to shareholders because the Viacom deal makes no sense.”

And as another CBS insider said, if he sells the company down the road, he will end up with still more.

Also from The Hollywood Reporter:

Will CBS-Viacom Brawl End With Leslie Moonves’ Golden Parachute?

Two media giants head to court as the TV mogul places a last-ditch bet on outmaneuvering Shari Redstone, with the fate of an empire on the line.

Is Shari Redstone the protagonist in a drama that could be titled “Daddy Dearest,” in which her domineering father years ago quietly devised a method to block her from eventually taking control of his media empire? Or is CBS Corp., which stunned Redstone by suing May 14 to prevent her from forcing a merger with Viacom, just playing the long odds with an audacious legal argument? Has CBS chairman Leslie Moonves calculated that even if his side loses, he’ll be paid handsomely to leave while sparing himself a possibly futile struggle to make a success of the combined companies?

Those are among the looming questions now that Moonves, 68, has launched open and potentially very personal warfare with Redstone, 64. CBS is arguing that a largely unknown (until now) provision in its charter allows the company to dilute the Redstones’ long-standing control by issuing new voting shares to stock­holders. The implication is that in 2005, when mogul Sumner Redstone split his media empire into two stand-alone companies — CBS and Viacom — he slipped in a provision giving the respective boards a way to block his daughter should she eventually try to impose her will.

The Redstones’ National Amusements holding company says it “strongly disagrees” with the CBS interpretation of the provision in question and that there never was any intention of forcing a merger.

Clearly Shari recoils at any suggestion that her now-ailing father meant to stymie her. While certainly Sumner did not always express a fond parent’s faith in his daughter’s ability to succeed him, she takes the position that Sumner supported her in 2005 when the companies were split and supports her today. (Whether Sumner, now a frail 94 and unable to speak, is capable of expressing an opinion on this issue could become a very sensitive part of the dispute.)

When Shari seized control of Viacom in 2016, then-chairman Philippe Dauman did not attempt to invoke the so-called “nuclear option,” choosing instead to take a very large check (about $72 million) to go away. But to many observers, Dauman had long appeared to be phoning it in and stashing the cash while Viacom drifted deeper and deeper into difficulty as its cable channels (MTV, Nickelodeon) and Paramount studio faltered and the media landscape changed.

At the same time, Moonves — also richly remunerated (he made $69.3 million in 2017) — has long been the undisputed master of his domain and has delivered good results even in turbulent times for CBS and the broadcast industry. He commands the loyalty of his board and the support of many, though not all, Wall Street analysts.

Under pressure to deliver scale in an advertising market increasingly dominated by Google and Facebook, Shari has decided the best path for her family empire is to merge CBS and Viacom into one $32 billion company. But Moonves’ insistence on maintaining control does not come as a surprise to anyone who knows him. And Shari was willing to leave him in charge of a combined company — for now — though initially she insisted on some meaningful role for Bob Bakish, her handpicked Viacom CEO. Some observers thought she had in effect blinked when she then agreed that Moonves didn’t have to give Bakish, 54, a top job as long as he got a board seat. But CBS apparently saw that as allowing the camel to poke its nose into the tent, as lawyers like to say.

Now CBS has rejected the whole idea of a merger, opting instead to go to war. In legal papers filed in Delaware, the company questions Shari’s earlier tactics in taking control of National Amusements and Viacom and explicitly argues that she “presents a significant threat of irreparable and irreversible harm” to CBS. It also claims Shari stymied a potential acquisition of CBS — sources say the suitor was Verizon — that would have benefited CBS shareholders. In response, National Amusements says it “is outraged by the action taken by CBS and strongly refutes its characterization of recent events. NAI had absolutely no intention of replacing the CBS board or forcing a deal that was not supported by both companies.”

The move to dilute the Redstones’ 80 percent voting power certainly is unusual, according to legal experts. “I don’t know if it’s going to work,” says University of Pennsylvania law professor Jill Fisch. “Maybe nobody’s ever thought of it.” Columbia Law School professor John Coffee agrees CBS’ move is “radical” and references two other corporations with dual-class share structures designed to ensure voting power. “Remember, if this can happen at CBS, it could happen at Facebook or Google years from now.”

In the suit, CBS argues that the so-called “Redstone discount,” meaning the family’s super-majority voting control, has long been viewed by Wall Street as “a potential cloud and depressant on the market value of CBS stock.” In other words, CBS shareholders suffer under Redstone rule, so the solution should be independence. Pointing to registration and proxy statements through the years, CBS claims the company has been held out to regulators and anyone buying common stock as an entity that would be governed by an independent board. The first test of this bold theory comes at a hearing May 16 in Delaware Chancery Court. But that’s only the beginning. It won’t settle the big issues such as Moonves’ continued role at CBS and Shari’s potential fiduciary-duty counterclaims against the CBS board.

And, of course, a deal could still be in the cards. As top Delaware corporate lawyer Francis Pileggi notes, “A lot of the time, litigation is used as a negotiating tactic.” Especially when it comes to the Redstone empire.

Or Moonves may have another goal in mind. One longtime industry insider — the veteran of his own Redstone wars — says the odds of CBS prevailing in court seem to be so long that “it smells to me like Les wants to get canned, collect his pay and go home.” That go-away fee could be much larger than Dauman’s, between $180 million and $280 million, according to an analysis of recent SEC filings. And the clock is ticking. Unless a deal is reached, the nuclear war could take an additional toll on two companies struggling to keep pace with digital goliaths. Viacom disclosed about 100 additional cost-cutting layoffs on May 15.

Analyst Steven Cahill warns that if Redstone goes to the mat to keep control and push through a merger, that could lead to “names being dragged through the mud and uncertainty over leadership and corporate structure for some months or even years as legal cases play out, likely with a fair amount of name-calling along the way.” The only sure thing: The lawyers will prosper and Moonves will, too.


Latest (5/14): CBS filed suit on Monday 14th May 2018, alleging that majority shareholder Shari Redstone is seeking to “force” a merger with rival Viacom on unfavorable terms, reports AFP.

The lawsuit filed in Delaware Chancery Court claims “breaches of fiduciary duty” by Shari Redstone and National Amusements, the holding company created by her father, 94-year-old Sumner Redstone.

CBS is seeking a temporary restraining order “to protect the status quo and to prevent imminent and irreparable harm” from merging CBS and Viacom, two media groups which were split a decade ago by Sumner Redstone.

The lawsuit alleges that Shari Redstone is seeking “to force through a merger of CBS and Viacom on terms that are contrary to the best interests of the public stockholders — without allowing them any voice on the transaction.”

This effort “would subvert the board-approved Special Committee process,” evaluating a tie-up of the two firms.

CBS said in February it had established a committee to consider reuniting the two companies, combining CBS with Viacom’s networks which include Nickelodeon, MTV, BET and Comedy Central.

The companies previously explored a combination in 2016, but later abandoned the effort.

Shari Redstone, acting on behalf of her father, effectively controls both firms through National Amusements through special voting shares.

CBS has called a special board meeting for Thursday that will consider issuing a dividend that would dilute the voting power of the holding company from 79 percent to 17 percent.

The dividend “would enable the company to operate as an independent, non-controlled company and more fully evaluate strategic alternatives,” a CBS statement said.

The lawsuit said Shari Redstone could force a merger by replacing CBS board members.

“If Ms. Redstone can replace Board members or modify the Company’s governance documents in the next three days, it is uncertain that the board will be able to protect all stockholders by considering at the next Board meeting whether to take action in response to her threats and breaches of fiduciary duty,” the suit alleges.

Also, from Deadline:

CBS Stakes Claim For Independence, Sues National Amusements For Breach Of Fiduciary Duty

In a dramatic escalation of the long-simmering tensions between CBS and controlling shareholder National Amusements, CBS and the Special Committee of its Board of Directors have filed a lawsuit looking to slash NAI’s controlling stake. While the near-term goal is to scuttle the proposed merger of CBS and Viacom, CBS says it seeks to operate as “an independent, non-controlled company,” with more strategic options down the line.

The suit (read it here) in Delaware Court of Chancery alleges breaches of fiduciary duty by National Amusements, the controlling shareholder of both CBS and Viacom. Shari Redstone, who runs National Amusements, has been locked in a struggle with CBS chairman and CEO Leslie Moonves over the company’s merger talks with Viacom. The flare-up comes on an already momentous week for CBS, which is holding its annual upfront presentation to advertisers on Wednesday and convening its annual shareholder meeting Friday.

The lawsuit seeks to prevent National Amusements from interfering with a special meeting of the board of directors. At the meeting, the directors will consider declaring a dividend of shares of Class A common stock to all of the Company’s Class A and Class B stockholders, as is permitted under CBS’ charter. The dividend would dilute the voting interest of National Amusements from its current level of about 79% to 17%. It would not dilute the economic interests of any CBS stockholder, the company said.

Redstone had reportedly indicated she would consider ousting Moonves and the entire CBS board if they stood in the way of the merger. One point of contention is the role that Redstone’s hand-picked CEO of Viacom, Bob Bakish, would play in the combined company. Moonves, who would run the re-merged entity, has favored CBS Chief Operating Officer Joe Ianniello over Bakish as his No. 2.

Wall Street reacted to the lawsuit by boosting CBS stock by 4%, while Viacom’s took a hit, dropping nearly 7% in morning trading. Many analysts in recent weeks have observed that Viacom needs the merger more than CBS. Viacom has been attempting to crawl out of a deep hole with a portfolio of cable networks, including MTV, Nickelodeon and Comedy Central, that has been hurt by cord-cutting and other disruptions to the traditional bundle. While CBS is experiencing similar headwinds, Moonves and his team have increased revenue from retransmission consent and content licensing. It has also debuted stand-alone streaming networks like CBS All-Access as hedges against live linear ratings erosion.

Reps from Viacom and National Amusements did not immediately respond to Deadline’s requests for comment.

The suit argues that National Amusements’ control derives from the company’s dual-class stock structure, not NAI’s economic ownership. A motion for a temporary restraining order looks to keep Redstone “from abusing NAI’s voting control and further harming CBS and its public stockholders in breach of their fiduciary duties,” according to the documents.

CBS is also demanding a May 17 board meeting to “discuss ways in which the Board may protect the Company against Ms. Redstone moving forward, including the potential issuance of a stock dividend that would dilute NAI’s voting power.” That gathering would come one day after CBS holds its customarily lavish upfronts presentation at New York’s Carnegie Hall, showcasing its upcoming TV season to deep-pocketed advertisers, with an after-party at the Plaza Hotel.

“The Special Committee has taken this step because it believes it is in the best interests of all CBS stockholders, is necessary to protect stockholders’ interests and would unlock significant stockholder value,” the company said in a press release. “If consummated, the dividend would enable the company to operate as an independent, non-controlled company and more fully evaluate strategic alternatives.”

CBS and Viacom were corporate siblings from 2000-2006. Since splitting, their fortunes have diverged in ways not envisioned by National Amusements founder and longtime chairman Sumner Redstone, Shari’s father. CBS after the separation became the most-watched broadcast network and has had a nearly two-decade run of ratings dominance.

Citing marketplace consolidation, Shari Redstone has long sought to recombine the companies, which have been holding formal merger talks since February. The main sticking points have been the management team and the value in the deal from the CBS side given the significant struggles at Viacom in recent years.


Also, from Bloomberg:

Les Moonves Sets Stage for Final Showdown With Redstone Family

Leslie Moonves has decided the fate of countless TV shows, from “Survivor” to “C.S.I.” Now he’s trying to write his own finale.

CBS Corp., where Moonves serves as chairman and chief executive officer, sued its controlling shareholder National Amusements Inc. on Monday — an unusual legal maneuver intended to block an unwanted merger with Viacom Inc. and wrest control of CBS away from Sumner Redstone and his heirs, the very family that put Moonves in power.

This could be the last stand for Moonves, a 68-year-old former actor who has run CBS for the past 13 years. If he prevails, he would emerge from this legal dispute free from control of the Redstone family, for whom he’s worked for nearly two decades. Or he can get ousted from his company, an unceremonious end to one of the most storied careers in the modern media business.

CBS claims Shari Redstone, president of National Amusements, isn’t acting in shareholders’ best interests, and must be prevented from replacing board members to force the network to merge with Viacom on her terms.

A Delaware chancery court judge will hear CBS’s argument on Wednesday, a day before the company’s board is scheduled to vote on National Amusements’ voting stake in CBS. Judge Andre Bouchard must decide if CBS’s board has the power to dilute NAI’s voting control.

CBS Takes Redstones to Court as Hopes Fade for a Viacom Deal

A board committee set up to weigh the Viacom merger is recommending directors approve a stock dividend that would dilute NAI’s voting power to approximately 17 percent from 80 percent — a move it says will protect the interests of CBS’s stockholders.

“No management team can perform in the shadow of the dangerous power Ms. Redstone wields,” the company said in a filing.

CBS filed suit after weeks of negotiations with Viacom, the owner of MTV, Comedy Central and Paramount Studios, which also is owned by the Redstone family. National Amusements labeled the act an outrage, and said it would “defend our position vigorously.”

Shari Redstone has been urging Moonves to merge with Viacom since she and her father deposed that company’s CEO, Philippe Dauman, in 2016. Viacom’s value had plummeted under Dauman’s stewardship, and the Redstones hoped Moonves could restore the company to its former glory. Viacom, which also owns the Nickelodeon child-targeted channel, was once the crown jewel of the Redstone’s media assets.

Viacom’s CEO
The two companies are locked in an unusual tussle. The Redstone family controls both businesses, and they were one corporation before a breakup in 2005. Getting them back together has proved challenging. Shari Redstone has indicated she wants Viacom CEO Bob Bakish to become the combined company’s second-in-command. Moonves wants to keep his own people in charge.

Though Moonves was more keen to combine with a media company on stronger footing, he was willing to join with Viacom so long as he received assurances of his independence from the Redstone family. The billionaire and his daughter never gave him those assurances, CBS said in its legal filing.

Moonves, who had already seen the Redstones oust Dauman, opted to pre-empt any move against him by challenging his controlling shareholders’ grip on power by using the dividend as a defense measure, said Larry Hamermesh, a Widener University professor who specializes in Delaware corporate law.

Showing Harm
“It may be tough for directors to show there’s irreparable harm to the company that justifies the dilution,’’ Hamermesh said. “The dividend that dilutes NAI down to 17 percent is pretty strong stuff.’’

Other companies with stock structures that allow investors to use voting power to control a firm have come under attack in Delaware, said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.

Last year, Facebook Inc. scrapped plans to create a class of nonvoting shares that would have allowed founder Mark Zuckerberg to retain voting control even while selling almost all his shares to fund philanthropic endeavors. “These dual-stock structures are becoming increasingly disfavored,’’ Elson said.

NAI owns about 10 percent of CBS’s shares, but the family’s voting power gives its nearly 80 percent control in CBS, which operates the Showtime premium cable network as well as its namesake broadcast network.

“While there is likely some months ahead of legal proceedings, we think this move all but kills a deal in any recognizable form,” Steven Cahall, an analyst with RBC Capital Markets, said in a note.


Also, from The Los Angeles Times (H/T: The Virginia Gazette):

CBS chooses ‘nuclear option’ against Shari Redstone: It sues to thwart Viacom merger

CBS Corp. has essentially declared war on its controlling shareholder Shari Redstone, setting the stage for an epic battle for control of one of America’s oldest and most popular broadcasting companies.

CBS’ board on Monday filed a lawsuit intended to thwart Redstone’s effort to push through a merger of CBS and Viacom Inc., the other New York-based media company controlled by the Redstone family.

The legal gambit escalates a high-stakes feud that has been playing out behind the scenes between Redstone and CBS’ Chairman and Chief Executive Leslie Moonves for much of this year.

“CBS draws first blood,” John Janedis, media analyst with the investment firm Jefferies, wrote in a research report.

The lawsuit came following weeks of tensions between Moonves and Redstone over the possible CBS-Viacom merger. On Friday, a Redstone representative told CBS that Shari Redstone wanted an unidentified CBS board member to be removed in advance of the company’s annual meeting with shareholders later this week, according to a person familiar with the matter who was not authorized to comment publicly.

CBS became alarmed, people close to the executive said. Moonves and several other board members have been suspicious about Redstone’s motives for months. They worried that she would invoke the Redstone family’s voting control to unilaterally reconfigure CBS’ board. The company quickly mobilized and held a meeting with members of a special committee of the board on Sunday. The committee formally rejected the CBS-Viacom merger and prepared a pre-emptive strike.

CBS on Monday asked a Delaware judge for a temporary restraining order to prevent Redstone and her family’s investment vehicle, National Amusements Inc., from trying to exert their influence before the board can meet Thursday and vote on a measure that would strip the Redstones of their control.

Moonves and other CBS executives have been stewing for months over CBS’ falling stock price as investors became skittish about the potential for a merger with the weaker company, Viacom. Leaks to media outlets that Redstone was prepared to fire the well respected Moonves, should he oppose a merger, only served to bolster CBS’ view that big changes were afoot.

Such fear is understandable. Only two years ago, Shari Redstone and her ailing father, Sumner Redstone, unilaterally made changes to Viacom’s board, which immediately tilted the balance of power and led to sweeping management changes. According to CBS’ lawsuit, Shari Redstone had been quietly interviewing candidates to replace Moonves.

The suit seeks to eliminate the Redstone family’s clout by treating them like ordinary shareholders. Although the Redstone family owns just 10.3% of CBS’ stock, they hold preferred shares — A shares — which give them nearly 80% of the vote.

Instead, at a meeting Thursday, CBS directors will consider issuing a dividend of Class A shares to all stockholders that would dilute National Amusements’ voting interest to 17%.

“Ms. Redstone, through her recently obtained domination and control of [National Amusements], has taken actions over the past two years that have led the Special Committee to conclude that she presents a significant threat of irreparable and irreversible harm to the Company and its stockholders,” the lawsuit says.

The lawsuit, filed in Chancery Court in Delaware, accuses Shari Redstone of breaching her fiduciary duty to CBS shareholders in her pursuit of a CBS-Viacom merger. CBS contends merger talks have wiped out $7 billion in CBS market value, harming rank-and-file shareholders. Last year, CBS shares were trading as high as $70 a share, but lately have been hovering around $50.

CBS also alleged in its complaint that Redstone rebuffed the CEO of another company about a possible merger with CBS. The potential suitor was Verizon Communications, according to two people familiar with the matter who were not authorized to speak publicly.

CBS’ board or its shareholders were not allowed to entertain discussions with Verizon — which likely would have sent CBS’ shares soaring, the sources said.

The Redstones appeared to be blindsided by Monday’s lawsuit, in part because CBS’ special committee had made at least two offers to buy Viacom. Although talks were slow, Shari Redstone felt that progress was being made toward a CBS-Viacom union.

National Amusements Inc. said in a statement it was “outraged” by CBS’ lawsuit. It “strongly refutes [CBS’] characterization of recent events,” adding that it had “absolutely no intention of replacing the CBS board or forcing a deal that was not supported by both companies.”

The company said it raised “specific concerns about incidents of bullying and intimidation in relation to one CBS director, dating back to 2016. NAI has made every effort to deal with this matter privately and confidentially. Unfortunately, CBS’ action today continues to enable and empower such conduct.”

National Amusements was preparing to file its own court papers, as early as Tuesday.

“Pass the popcorn,” Doug Creutz, a media analyst with Cowen & Co. wrote in a research report. “It is hard to gauge the chances of success for CBS, however, we view the suit as consistent with acting in the best interest of shareholders.”

Shari Redstone has led the campaign for reuniting the companies, and this is the second time in two years that she has tried to make that happen. She believes they would be stronger together as traditional media companies gird for battle with such technology giants as Facebook, Google, Netflix and Amazon.

But CBS does not want to be weighed down by Viacom’s cable channels, including MTV, Comedy Central, VH1 and Nickelodeon, which have lost steam in the ratings as viewers switch to streaming services that don’t have commercials.

And Moonves and other CBS board members don’t want Shari Redstone to have sway over the company that Moonves has successfully managed for 12 years.

“She has threatened to impose her and NAI’s will on the company at the expense of all of the company’s stockholders,” CBS said in its lawsuit. “She has undermined management. It has been publicly reported that she will replace directors who will not do her bidding. She has sought to combine CBS and Viacom regardless of the strategic and economic merits of the transaction and to the exclusion of considering any other potential transaction.”

The lawsuit is a “classic example” of why companies with two classes of stock, including CBS and Viacom, can be problematic, said Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware.

Under CBS’ structure, holders of Class A shares have voting power, while those with Class B shares do not.

Redstone previously said that she would like Moonves to serve as chief executive of the combined company for at least two years. A sticking point in the merger talks is what role her handpicked lieutenant — Viacom CEO Bob Bakish — would play.

With its lawsuit, CBS went for the “nuclear option,” said C. Kerry Fields, a professor of business law and ethics at the USC Marshall School of Business. The suit, Fields said, is Moonves’ way of communicating to shareholders that CBS is on a strong trajectory under his leadership and should not be saddled with Viacom’s troubles.

Fields said the judge will “undoubtedly” grant the temporary restraining order to prevent interference with the board’s special meeting.

“Judges typically are sympathetic to applications for temporary restraining orders when there is a matter of great seriousness that might be upset if this injunction isn’t put in place,” he said.

CBS shares closed $53.65, up 2%. Viacom closed at $28.74, down nearly 5%.


1:25 p.m.: This article was updated to include comments from University of Delaware professor Charles Elson.

9:55 a.m.: This article was updated to include a statement from National Amusements.

9:05 a.m.: This article was updated to include comments from USC professor C. Kerry Fields.

8:10 a.m.: This article was updated to add that the lawsuit accuses Shari Redstone of breaching her fiduciary duty.

This article was originally published at 7:35 a.m.


Latest (5/4): Shari Redstone, the media heiress whose family controls CBS Corp and Viacom Inc , has offered CBS CEO Leslie Moonves to drop her demands for Viacom CEO Bob Bakish to be his No. 2 following a merger, as long as Bakish sits on the combined company’s board, people familiar with the matter said on Friday, May 4th, reports Reuters.

Moonves has agreed to run the combined company for at least two years, as long as CBS Chief Operating Officer Joseph Ianniello will be president and chief operating officer of the combined company, so he can succeed him, sources have previously said.

Redstone, daughter of media mogul Sumner Redstone, has offered not to give Bakish any executive role in the combined company, but still wants him to sit on the board of directors and eventually succeed Moonves, the sources said on Friday.

Moonves does not want Bakish to be part of the combined company at all – either as an executive or board member – because he is seeking as much autonomy as possible in running the combined company, said one of the sources.

As a result of the impasse over Bakish’s role, CBS executives have serious doubts that a deal will happen, the source said. CBS and Viacom have also disagreed about the stock exchange ratio that should be used in a merger, although the two sides are making progress on that front, the sources added.

The sources asked not to be identified because the matter is confidential. CBS, Viacom, and National Amusements Inc, the company of Shari Redstone, declined to comment.

Redstone offered her concessions earlier this week in a meeting with Moonves that included Richard Parsons, who recently joined the CBS board and is acting as a conduit between the two sides, the sources said.

There has not been any agreement about the composition of a combined company’s board, the sources said.

Ten of the 14 director nominees for consideration at this year’s CBS annual meeting are 70 or older. The average age is 72. The average for companies in the S&P 500 Index as a whole is 62. Two of Viacom’s directors are 70 or older, according to the company’s proxy statement.

Latest (4/11): Shari Redstone is likely to replace CBS chief Les Moonves if no merger deal is reached with Viacom, sources have told CNBC. CBS is expected to make another offer soon, but the new bid is expected to fall short on price, sources say.

If Moonves is removed as CEO of CBS, the exec could collect an eye-opening $184 million from the company, reports Deadline.

Latest (4/10): Viacom in recent days got an expression of interest from a major media and tech company — but it was rebuffed by Viacom, according to a source briefed on the situation, reports the New York Post.

That prospective bidder was particularly interested in Viacom’s Paramount Pictures unit as it floated an interest in the entire company, the source said. Meanwhile, other media companies have expressed an appetite for its TV networks, including Nickelodeon, Comedy Central and BET, according to sources. “If Viacom launched an open sales process, there would absolutely be buyers,” a source closely following the merger talks said.

Viacom’s reluctance to engage with suitors other than CBS has, in turn, convinced many insiders that CBS and Viacom are determined to overcome their differences, the source added.

Media tycoon Sumner Redstone — whose holding company National Amusements Inc. has voting control of both CBS and Viacom despite his only owning about a 10-percent economic interest in the media businesses — doesn’t want to let Viacom go, according to one source. Accordingly, “Sumner has made Viacom Shari’s baby,” the source added, referring to his daughter, Shari Redstone, who is now pulling strings as vice chair of both CBS and Viacom. “I would be very surprised if they sold Viacom.”

Latest (4/9): Viacom is pushing CBS Corp. to raise its takeover bid for the company, asking for a deal that would add nearly $3 billion to the valuation of the company. Viacom has asked CBS to raise its all-stock bid to a level that would value the company at around $14.7 billion. Viacom as expected is also pushing for its current CEO, Bob Bakish to be named president and chief operating officer of the combined company, to be led by CBS’ chairman-CEO Leslie Moonves. News of Viacom’s counteroffer was first reported early Monday (9th April 2018) by Reuters. A source close to the situation confirmed Viacom’s counteroffer despite the fact that both Viacom and CBS have yet to publicly acknowledge the statis of acquisition negotiations. CBS is speculated to reject Viacom’s counteroffer.

Additionally, one of CBS Corp.’s biggest shareholders has written to the company’s board saying it should only proceed with a deal for Viacom Inc. if certain terms can be agreed on. The shareholder, who declined to be identified, wants CBS Chief Executive Officer Leslie Moonves and his management team to lead the combined company. If that doesn’t happen CBS should be compensated with a “clear premium” when the final share ratio of a deal is decided, according to the letter obtained by Bloomberg. A merger with Viacom isn’t the “optimal strategic path” for CBS, the shareholder wrote in the letter, dated March 21. It urges the broadcaster’s special committee of independent directors not to pay above current market price in any transaction. “Coming to the rescue of a weakly positioned, poorly executing, over-levered Viacom is not CBS’s burden,” the investor wrote. The shareholder is among the top 10 CBS holders, according to a person familiar with the matter who asked not to be identified as the details aren’t public.

Latest (4/4): Viacom has swiftly rejected CBS’s below-market offer to reunite the US media companies separated over a decade ago, kicking off what is likely to be one of the most hotly contested takeover battles in the traditional broadcasting and film industry. However, Viacom is speculated to make a counterproposal this week, people familiar with the matter have said.

CBS offered 0.52 of its shares for each Viacom class B share, valuing the owner of Nickelodeon, MTV and the Paramount film studio below its $12.8bn market capitalisation, said people briefed about the matter.

Viacom believed the bid failed to recognise the fair value of the company, people close to its senior management said, adding that CBS would have to offer more than 0.62 of its own shares to get a deal done.

The significant gap in valuation, however, is not the only obstacle to getting a deal done.

Les Moonves, chairman and chief executive of CBS, wants the combined company to be run by his lieutenants. According to people briefed on CBS’s proposal, Mr Moonves would remain in charge and Joe Ianniello, CBS’s chief operating officer, would be his second-in-command, leaving Bob Bakish, Viacom’s chief executive officer, out of the picture.

Shari Redstone, who controls both companies through the holding group National Amusements, favours Mr Bakish as the second-most senior figure in a combined company, said people briefed about the matter.

Negotiations between the two sides were likely to stretch for several weeks, said people close to both sides.

Although the Redstone family are keen to get a deal done, believing that a merger would generate significant annual synergies, it remains unclear whether an agreement between the top managers of the two companies an be reached.

A deal would reunite CBS and Viacom 13 years after Ms Redstone’s father, Sumner, split them in an effort to allow Viacom to grow faster.

At the time, Viacom was one of America’s hippest media companies, with many analysts believing that MTV and Comedy Central would experience record revenue growth based of the wide appeal they had on younger television viewers. However, with the advent of digital champions such as Netflix, HBO and Vice, Viacom’s top brands struggled to perform as expected.

CBS, which in the mid-2000s was viewed as the weaker unit of the then combined group, has instead flourished under the leadership of Mr Moonves. CBS’s stock value has more than doubled since the split, while Viacom’s has fallen below its debut as an independent company.

Original post:

Viacom / CBS Merger: Viacom Inc. Board Forms Special Committee to Evaluate Potential Combination with CBS Corporation

Viacom Inc. Board Forms Special Committee to Evaluate Potential Combination with CBS Corporation

Update (2/1): Viacom Inc. (NASDAQ: VIAB, VIA) today announced that its Board of Directors has established a special committee of independent directors to evaluate a potential combination with CBS Corporation. The Committee has retained independent legal counsel and is retaining independent financial advisors in connection with this evaluation.

There can be no assurance that this process will result in a transaction or on what terms any transaction may occur. Neither Viacom nor the Committee intends to comment further until the process is completed.

About Viacom

Viacom is home to premier global media brands that create compelling entertainment content – including television programs, motion pictures, short-form content, apps, games, consumer products, podcasts, live events and social media experiences – for audiences in more than 180 countries. Viacom’s media networks, including Nickelodeon, Nick Jr., MTV, BET, Comedy Central, Paramount Network, VH1, TV Land, CMT, Logo, Channel 5 (UK), Telefe (Argentina), Colors (India) and Paramount Channel, reach approximately 4.3 billion cumulative television subscribers worldwide. Paramount Pictures is a major global producer and distributor of filmed entertainment. Paramount Television develops, finances and produces original programming for television and digital platforms.

For more information about Viacom and its businesses, visit Viacom may also use social media channels to communicate with its investors and the public about the company, its brands and other matters, and those communications could be deemed to be material information. Investors and others are encouraged to review posts on Viacom’s company blog (, Twitter feed ( and Facebook page (


Update (4/3): CBS Corp. will offer less than the current market value of Viacom Inc. in its opening bid for the owner of Nickelodeon and MTV, according to a person with knowledge of the matter, showing how far apart the companies are as they explore recombining.

CBS’ proposed all-stock offer — which could come in the next few days — is expected to put a lower valuation on Viacom than its current market capitalization, according to a person familiar with the process but not authorized to discuss it.

In addition, the CBS offer is expected to stipulate that its chairman and chief executive, Leslie Moonves, would run the combined company for at least two years, the knowledgeable person said. Moonves’ contract with CBS goes through mid-2021.

Viacom and CBS vice-chairwoman Shari Redstone is pursuing a merger of the two media companies that split more than a decade ago, according to multiple insiders who spoke to TheWrap.

With the Hollywood landscape quickly shifting, Redstone, president of the privately-held National Amusements that controls both media companies, has concluded that a bigger footprint is necessary for the companies to thrive. CBS’ core business is broadcast television along with multiple digital properties, while Viacom holds cable channels like Nickelodeon and Comedy Central along with the Paramount movie studio.

A time frame for any potential merger is unclear, but three individuals with knowledge of the companies said that Redstone is actively moving in that direction, which represented another shift in her back-and-forth mindset on the matter.

Viacom and National Amusements declined to comment, and CBS had no immediate response to a request for comment.

Viacom shares reacted quickly to the news. Shares of the company, which controls MTV, Nickelodeon, Comedy Central and the Paramount movie studio, rose nearly 10% Friday, or $2.95 a share, to $33.76 a share from $30.90. Volume was strong – 12.45 million shares – compared to average volume of 5.07 million.

Shares of CBS rose more modestly, up 1.85%, or $1.07 a share, to $58.83 a share from $57.78. Volume was 6.19 million compared with average volume of 4.01 million.

CBS chairman Les Moonves, who has long resisted talk of recombining the companies, is now open to the possibility, the insiders said. He would be the most likely person to run the merged companies, though Redstone is considering other candidates, according to two insiders.

An individual close to Moonves acknowledged the process to TheWrap: “He’s having active discussions with Shari and the board on a wide variety of issues all the time, including this one. And those discussions continue with regard to looking to merge the two companies.”

One insider told TheWrap that Redstone was looking at other candidates because Moonves was demanding an ownership stake and she thought his demands were too rich. The individual close to Moonves disputed this, saying: “At no time has he asked for an ownership position.”

The move to merge the companies represents another reversal for Redstone, who directly appealed to CBS and Viacom to merge in September 2016, then retreated from this in the following months, presumably because of Moonves’ opposition.

In a letter in September 2016 to both boards from her parent company National Amusements, she touted the potential of “substantial synergies” that a merger would bring. She called on the boards to “respond even more aggressively and effectively” to combat the challenges they both faced.

Redstone later reconsidered after ousting Viacom CEO Philippe Dauman and replacing him with Bob Bakish — whom she installed after successfully wresting control of Viacom in a bruising boardroom and legal battle over succession plans involving her father, Sumner Resdstone.

“We talked about it, and what became apparent to me very quickly was that our assets were severely undervalued, which I had understood, but what I didn’t understand at the time was the significant upside that existed in our businesses once we had a good management team in place and the culture came back,” Redstone said at last May’s re/code conference.

The new merger talk comes amid a new period of consolidation in the entertainment and media industry. In December, Disney announced plans for a $52.4 billion acquisition of the bulk of 21st Century Fox’s movie and TV assets, while telecom giant AT&T is attempting to complete the $85.4 billion acquisition of Time Warner announced more than a year ago.

Meanwhile, the rise of streaming giant Netflix as well as the ambitious moves by tech giants like Amazon and Apple into the entertainment content space have set off a period of strategic change in the sector.

The market cap of Viacom is $12.7 billion, while the market cap of CBS is $23.2 billion.

In February 2016, the then 92-year-old Redstone stepped down as chairman of both Viacom and CBS amid questions about his age and mental competency. Moonves assumed the chairman title at CBS, while Viacom CEO Philippe Dauman was ousted and ultimately replaced by Robert Bakish.

Viacom and CBS had merged into a single company in 1999, which Sumner Redstone split in 2005 in an attempt to maximize shareholder value.

The Redstones control both the CBS and Viacom through their supervoting shares held by National Amusements.

As of December 2016, National Amusements, directly and through subsidiaries, holds approximately 79.8 percent of the Class A (voting) common stock of Viacom Inc., constituting 10 percent of the overall equity of the Company, and holds approximately 79.5 percent of the Class A (voting) common stock and 2.4 percent of the Class B (non‐voting) common stock of CBS Corporation, constituting 9.1 percent of the overall equity of the Company.

Also, from Variety:

Viacom, CBS Shares Rise After Report Suggests New Merger Talks Have Started

Shares of both Viacom Inc. and CBS Corp. rose noticeably Friday after a new report suggested the two companies, both controlled by the Redstone family, could once again be considering the prospect of merging.

A report in The Wrap suggested Shari Redstone, president of the family’s National Amusements movie-theater chain, had recently sparked new discussions within the companies about a possible merger. Her father, Sumner Redstone, had combined CBS and Viacom in 2000, only to pull them apart six years later. National Amusements in September of 2016 formally requested that the boards of both companies consider the possibility of a new merger on an all-stock basis, then stopped the process at the end of that year.

CBS declined to comment. A Viacom spokesman did not immediately respond to a query seeking comment.

The report comes as more media companies are considering tie-ups that would give them a larger footprint in a sector that has been flummoxed by new technology and consumer patterns. Monetizing viewership of content has become more difficult as consumers migrate to new video screens and behaviors that aren’t measured as easily, crimping the flow of advertising support and undermining media companies’ ability to lock in fees from distributors.

To fight back against these trends, a number of prominent media companies have set big acquisitions or outright mergers. Among the recent combinations: Charter Communications and Time Warner Cable and Lionsgate and Starz. Other tie-ups have been proposed but not completed. Discovery Communications is expected to finalize its purchase of Scripps Networks Interactive later this year. AT&T is pursuing legal options to finalize its proposed merger with Time Warner. And Walt Disney has agreed to purchase a substantial chunk of 21st Century Fox, including the 20th Century Fox movie studio, the FX and National Geographic cable networks and a passel of regional sports operations.

The companies that don’t embrace other assets have begun to look considerably smaller.

If a merger is being discussed, it is not on a fast track. A person familiar with the situation suggested no substantive steps in any process were taking place at the current time.

Viacom shares reacted quickly to the news. Shares of the company, which controls MTV, Nickelodeon, Comedy Central and the Paramount movie studio, rose nearly 10% Friday, or $2.95 a share, to $33.76 a share from $30.90. Volume was strong – 12.45 million shares – compared to average volume of 5.07 million.

Shares of CBS rose more modestly, up 1.85%, or $1.07 a share, to $58.83 a share from $57.78. Volume was 6.19 million compared with average volume of 4.01 million.

CBS has fared well in recent months, despite its medium size in the sector. The owner of the CBS broadcast network and the Showtime cable outlet has in recent months focused on maximizing the revenue it draws from its content by scrutinizing the fees it draws from retransmission and overseas syndication. Rather than make big acquisitions, CBS has launched a spate of new digital businesses, including the “CBS All Access” subscription video on demand service and a streaming-video news product, CBSN, that makes new use of content from CBS News. Leslie Moonves, the company’s chairman and CEO, has discussed the launch of a new streaming-video sports-content service and CBS has unveiled interesting plans for “All Access,” like a revival of the classic series, “The Twilight Zone.”

Viacom, meanwhile, has worked to recalibrate itself under a new leader. Bob Bakish took over as CEO of the company in December of 2016 and has since that time reorganized the company and placed new leaders in charge of MTV and set about to transform the company’s Spike cable outlet into a more general-entertainment property called the Paramount Network. A launch is slated in the days ahead. Bakish has also placed more emphasis on events related to some of the company’s big assets, including a new festival launched by Comedy Central.


Also, from the LA Times:

Shari Redstone once again eyeing a merger of CBS and Viacom

Shari Redstone wants to recombine CBS Corp. and Viacom Inc. to better fortify the two medium-sized media companies at a time when other entertainment companies are scrambling to bulk up.

There are no merger talks underway, three people familiar with the matter who were not authorized to publicly discuss the situation said Friday. However, Redstone, whose family controls the voting shares of CBS and Viacom, ​​​​​​ increasingly sees a merger as a compelling option for the two companies that have operated separately for 12 years, according to these people.

Redstone, who serves as vice chair of both companies, has expressed her feelings to the leadership and boards of the two entities, according to the sources.

“Shari is determined to get them back together,” said one of the sources. “Everything else she could think of went nowhere.”

Redstone was not immediately available for comment.

Viacom owns MTV, Comedy Central, BET Nickelodeon and the Paramount Pictures film studio in Hollywood. CBS owns the CBS broadcast network, TV stations, premium channel Showtime and a boutique film studio.

Her rekindled interest in merging the companies, which was reported Friday by the Hollywood trade publication the Wrap, comes as little surprise. Redstone previously said she didn’t support the decision by her father, the ailing mogul Sumner Redstone, to divide the family empire in 2006.

“I was never a great proponent of the split of the two companies,” she said at a media conference in November 2016.

Earlier that fall, Redstone announced that she wanted the two companies to explore a merger and board-level exploration committees were formed. The stronger CBS began evaluating whether to acquire Viacom, but the talks fell apart in December 2016 over a valuation of Viacom, which has seen its stock fall more than 50% since early 2015.

Redstone also decided that she wanted to give Viacom Chief Executive Bob Bakish — who was appointed at the end of 2016 — a chance to turn around the company.

But much has changed in the last year. Key Viacom cable channels continue to struggle with ratings declines and accelerated cord cutting. Viacom generates its profit from cable TV channels, so the shrinking universe of pay-TV homes makes it more difficult to grow its business.

Compounding matters, Paramount is coming off another rough year, with recent flops such as “Suburbicon,” “Mother” and “Downsizing.” The studio ranked seventh last year among all distributors in market share in the United States and Canada, according to Box Office Mojo.

Paramount’s new chairman and CEO, Jim Gianopulos, who joined last year, has been shaking up the studio’s executive ranks in an effort to engineer a turnaround.

Meanwhile, CBS’ stock stagnated in 2017 as investors grew less bullish on media.

Other medium-sized companies have become merger bait as traditional media companies see increased scale — and distribution — as a way to compete with the likes of Google, Facebook, and Netflix.

Telecommunications giant AT&T is trying to buy Time Warner Inc., which owns HBO, CNN, TBS and the Warner Bros. movie and television studio. Last summer, two other cable programmers — Scripps Networks Interactive and Discovery Communications — agreed to their own merger.

Then last month, Rupert Murdoch’s 21st Century Fox stunned the industry when it agreed to sell much of the company, including the 20th Century Fox movie and television studio, to the Walt Disney Co. Analysts and investors predicted the blockbuster deal would trigger other consolidations, including a recombination of Viacom and CBS.

People close to the companies quickly cautioned that there was no timetable for a deal, or even if one would happen.

“There have been talks about this — and many other things — at the board level,” according to one person close to CBS.

Others have speculated on the prospect of a roll-up of CBS, Viacom and Lionsgate. Lionsgate, in recent years, has been more successful than Viacom’s movie division.

Viacom shares closed Friday at $33.76, up $2.95, or nearly 10% on Friday.

CBS stock closed up nearly 2%, or $1.05 to $58.83 a share.


Also, from Observer:

CBS and Viacom Reportedly Eyeing Merger

What once was broken may be made whole once again.

TheWrap is reporting that Viacom and CBS vice-chairwoman Shari Redstone is looking to merge the two media companies following their split in 2006.

Amid the Hollywood arms race that has seen AT&T attempt to acquire Time Warner and Disney swallowing up 21st Century Fox, Redstone, who serves as president of National Amusements Inc. and controls both media companies, is looking to scale her own business to keep pace.

CBS earns its keep with broadcast television—the small screen’s most-watched show, The Big Bang Theory, has them set up nicely—and several digital properties. Viacom owns Paramount Pictures, as well as popular cable destinations such as Comedy Central and Nickelodeon.

CBS led all television networks in total viewers last year, according to Nielsen data.

But how serious are these discussions? It depends on who you ask.

According to Reuters, “Viacom Inc and CBS Corp are not in active merger discussions, although controlling shareholder Shari Redstone has had exploratory conversations with CBS directors about recombining the companies.”

CBS declined Observer’s request to comment. Viacom has yet to respond, neither has National Amusements Inc.

No timeline for the potential deal has emerged yet, though TheWrap’s sources say Redstone is pushing for it. She and father Sumner Redstone unsuccessfully attempted to merge the two in 2016.

CBS chairman Les Moonves, who is said to have been against the merger for some time, is reportedly softening on that position. If the merger were to go through, he is thought to be the frontrunner to head both companies.

Here’s how one of TheWrap’s sources explained it: “He’s having active discussions with Shari and the board on a wide variety of issues all the time, including this one. And those discussions continue with regard to looking to merge the two companies.”

“I’m very confident that our unparalleled collection of businesses will continue to grow in their present form, as well as the many new platforms that are making a splash in the new media landscape,” Moonves said of the split back in 2006. The move was originally made to diversify the media conglomerate and regain the confidence of Wall Street investors.

This rumor pops up as other major deals are going down across Hollywood.

The aforementioned sale of Time Warner to AT&T comes with a price tag of $85.4 billion, while Disney’s acquisition of Fox set them back $52.4 billion. Some insiders have also posited that Apple is eyeing Netflix for an estimated $75 billion.

More details to come…


Also, from Reuters UK:

Shari Redstone explores adding new CBS directors – WSJ

(Reuters) – Shari Redstone, a controlling shareholder of CBS Corp (CBS.N), has discussed adding new directors to the CBS board as she renews her push to merge the company with Viacom Inc (VIAB.O), The Wall Street Journal reported on Wednesday.

Shari Redstone and Sumner Redstone, her ailing 94-year-old father, together control both CBS and Viacom Inc (VIAB.O) through their privately owned movie theatre company, National Amusements Inc. The Redstones failed in an attempt to merge the two companies in 2016.

Shari Redstone, who is vice chair of the CBS board, has had exploratory conversations with CBS Chief Executive Leslie Moonves and directors about recombining the companies, sources have told Reuters.

While Moonves is receptive to a combination, he has some reservations, sources have told Reuters.

Spokesmen for CBS and Viacom declined to comment.

CBS is looking to replace several of its directors at its annual shareholders meeting in May, and Shari Redstone is gathering names of possible candidates, according to The Wall Street Journal.

Shari Redstone’s push to revisit a CBS merger with Viacom has become more pressing in light of Walt Disney Co’s (DIS.N) planned acquisition of a majority of Twenty-First Century Fox Inc’s (FOXA.O) assets, the sources told Reuters.

A combined CBS, which owns cable networks including Showtime and The Movie Channel as well as the CBS TV Network and CBS TV Studios, and Viacom, whose businesses include Paramount Pictures, Nickelodeon Movies and MTV Films, would have more negotiating leverage with cable and satellite companies.

In addition, Shari Redstone does not want to wait for the verdict on the U.S. Department of Justice’s lawsuit to block AT&T Inc’s (T.N) $85 billion acquisition of Time Warner Inc (TWX.N), which is set to go to trial in March, the sources told Reuters. The Justice Department is suing to block that deal on the grounds that it is anti-competitive.

If that deal were to fall through, it would mean both AT&T and Time Warner Inc may look for other companies to combine with, sources have said.

Viacom’s new CEO, Bob Bakish, has improved relations with distributors, found financing for Paramount Pictures after Chinese investors dropped out and shuffled programming.

Even so, Viacom’s stock is trading around $32 a share, below the $35-$38.80 range it was trading at when it and CBS explored a merger in late 2016.

It is unclear if the valuation and corporate governance issues that caused the deal to fail in 2016 remain.

Some analysts said they believe the selloff in Viacom, along with the consolidation in the media space, should prompt CBS to revisit the deal.

“We think now is as good a time as any to reexamine why we continue to believe this deal is the most logical and appropriate transaction to take place within our media coverage universe,” MoffettNathanson analysts wrote this week.


Also, via The Hollywood Reporter:

Shari Redstone Pushing for New Board at CBS (Report)

There are no active talks to merge the companies as of the moment.

If the board of directors at CBS isn’t keen on merging the company with Viacom, then some of the directors apparently need to be replaced.

At least that’s what Shari Redstone might be advocating, The Wall Street Journal reported on Wednesday.

Redstone and her family control both Viacom and CBS through their large stake in National Amusements, and insiders say she’s been getting serious about her desire to see the two media companies combined again, as they were prior to splitting Viacom in two back in 2005.

CBS CEO Les Moonves and some others on the board, though, have been resisting, and CBS investors appear to be siding with them. On Wednesday, for example, Viacom shares jumped 4 percent at the prospect of a new merger-friendly board at CBS, while shares of CBS fell 2 percent.

Rumors that CBS will merge with Viacom pop up often, most recently last week, though by Monday it appeared to Wall Street that there was nothing concrete in the works, which removed a catalyst for Viacom’s long-suffering stock to move higher.

On Tuesday, in fact, Rosenblatt Securities analyst Alan Gould lowered his rating on Viacom stock to “sell” based on his opinion that it won’t merge with CBS anytime soon, while he reiterated a “buy” recommendation on CBS. The analyst says CBS would make a better partner with Verizon, among others, than it would with Viacom.

While insiders tell The Hollywood Reporter that there are no active talks to merge Viacom and CBS right now, the Journal says that Redstone reached out to Moonves earlier this month to request that he start negotiating as early as this quarter.

Investors on both sides appear to be clamoring for something dramatic to happen, as shares of both Viacom and CBS trade for less than they did a year ago even as the stock market in general has been on a powerful bull run.

Plus, AT&T’s pending acquisition of Time Warner and Disney’s pending acquisition of most of 21st Century Fox has Wall Street presuming that media companies need to grow bigger, quickly, through acquisition, if they’re to remain competitive.

CBS had no comment, and Viacom was not available for comment.

Also, from Variety:

Revival of CBS-Viacom Merger Talk Sows Tension Within Redstone Empire, Again

Chatter about Shari Redstone revving up an effort to recombine Viacom and CBS Corp. is sowing tension within both companies.

CBS insiders were aghast at a report in the Wall Street Journal Wednesday citing Redstone’s concern about a lack of long-term strategic planning at the Eye and the level of independence among its board members.

Meanwhile, Viacom executives are once again nervous about the potential for consolidation with CBS to bring wholesale changes to the management of the company, particularly the cable networks division. The sentiment among insiders is that things have only just started to settle down after a year of turmoil in 2016, before Bob Bakish was named permanent CEO in December of that year.

“Here we go again,” said an executive at Viacom’s MTV Networks.

Sources at both companies expressed surprise and frustration that the first stirrings of a re-merger effort are emerging through media reports rather than through the board room. A rep for Redstone declined to comment.

Redstone, who is vice chairman of Viacom and CBS, went public with her desire for the companies to reunite in the fall of 2016 but ultimately backed down after pushback from both boards on questions of price and governance. At that time, Viacom was on the ropes after a months-long legal battle between controlling shareholder Sumner Redstone, Shari Redstone and former Viacom CEO Philippe Dauman.

CBS and Viacom were first brought together by Sumner Redstone in 2000. But six years later, the mogul opted to re-divide the companies into separate entities. At the time, Redstone said he thought it would help both companies realize their true valuation from the market. Shari Redstone is on record as having opposed the split back in 2005.

The $52.4 billion deal unveiled last month by Disney to acquire 21st Century Fox has quickly heightened pressure on smaller media conglomerates like CBS Corp. and Viacom to bulk up or be seen as a takeover target. The Redstones’ tight control of CBS and Viacom has frustrated past efforts for CBS Corp. chairman-CEO Leslie Moonves to engage in merger conversations with prospective partners such as Time Warner, Lionsgate and more recently, Verizon.

It’s understood that Shari Redstone has insisted Viacom be part of any M&A conversations involving CBS. That’s a big hurdle for suitors who might be interested in CBS’ broadcast assets and its vast library of TV shows.

Viacom’s biggest drawback is its reliance on the MTV Networks division as its engine of earnings and profits. Not only are the core Viacom cablers (MTV, Nickelodeon, Comedy Central) facing ratings challenges, as is every other traditional TV outlet, but it’s clear that Viacom will have to shed some of its lower-profile channels in the coming years. How to put a price on those lesser channels today, given their steadily diminishing value, was a big part of the obstacle to re-merger discussions in 2016.

The coolness from top brass at CBS to a deal with Viacom has been palpable. It’s seen as a rescue effort for Viacom, which is still battling tough forecasts of declining affiliate and advertising revenue for its cable networks in the coming years. Viacom is also still in the early stages of a management turnover at Paramount Pictures, which hemorrhaged red ink during the previous three years.

CBS, on the other hand, has ridden the boom in content licensing to a series of record quarters. In March 2016, CBS laid out a five-year strategic plan at a daylong investor presentation in which it cited content licensing, international expansion, retransmission consent revenue, and new streaming platforms including CBS All Access and Showtime as pillars of its growth plan.

The Eye committed at that presentation to deliver 8 million OTT subscribers by 2020; last August, Moonves said CBS All Access and Showtime’s standalone streaming service were more than halfway to that goal. Retrans revenue, a big driver of profits, is projected to hit $2.5 billion annually by 2020.

On the international front, CBS has expanded Showtime’s reach in key foreign markets for the first time during the past two years, and it also swooped in on the fire sale of Australia’s Network Ten in November.

The level of detail that CBS laid out in 2016 and the progress reports delivered since then were cited by multiple CBS sources who were outraged by the reference to a lack of long-term planning in the Journal report, which cited multiple sources familiar with Redstone’s thinking.

The reported drive by Redstone to find replacements for some of CBS’ board members also rankled insiders, given the prominence of independent directors such as former Bank of America chairman Charles Gifford, former senator and Defense Secretary William Cohen, former NAACP president Bruce Gordon, and Harvard Law School dean Martha Minow. CBS typically holds its annual meeting in May. It’s unclear how many directors will be up for re-election at that time.

Sources said there is consternation within CBS over fears that tension between Moonves and Redstone could be destabilizing overall for the company. Sources close to the situation said that as of Wednesday, there have been no formal steps to initiate merger talks between the two boards.

Also, from Deadline:

Wall Street Has Mixed Response To Word Of Renewed Viacom-CBS Talks

UPDATED at 2:20 pm: Investor reaction has been mixed this afternoon to renewed speculation that CBS and Viacom are about to recombine.

A Wall Street Journal report this afternoon confirmed a story late last week that the former corporate siblings were again exploring a merger. An hour before the close of trading today, Viacom shares are up 2% to $31.96, given the perceived benefits of tying a cable-bundle-dependent company to the No. 1 broadcaster.

The two companies merged in 1999 in a then-momentous transaction, before parting ways in 2006. They had previously explored coming together again before abandoning plans in 2016. Given the Disney-Fox deal, AT&T’s pending takeover of Time Warner and a host of others, the urgency is growing for next-tier players to gain scale.

Sources said CBS Chief Executive Leslie Moonves had been deeply skeptical in 2016 about the value of the combining the broadcaster, which was thriving, with the struggling Viacom. And Viacom was optimistic about its prospects under the new leadership of Robert Bakish.

But the media landscape has shifted substantially since then.

“It’s ludicrous to thinking CBS and Viacom can be stand-alone companies,” said BTIG’s veteran media analyst Richard Greenfield. “It’s 18 months delayed for no reason other than Les Moonves’ obstinance. That’s what stopped this deal. In a world where Disney and Fox are merging, his obstinance no longer matters.:

What does matter, in the current climate, is scale. Content companies need a stronger balance sheet, in order to pursue sports, or need to amass a more content for an over-the-top service. CBS’s streaming service would be bolstered by Viacom’s wealth of children’s programming through Nickelodeon, Greenfield notes, not to mention Paramount’s film library.

According to the Journal, Shari Redstone is the chief proponent of the idea. She contacted CBS CEO Leslie Moonves, who previously had resisted the notion, to renew discussions about merging the broadcaster with Viacom.

The Redstone family controls CBS and Viacom through their holding company, National Amusements.


Also, from Reuters UK:

Exclusive – Viacom, CBS CEOs discuss potential merger: sources

(Reuters) – Viacom Inc Chief Executive Bob Bakish and CBS Corp CEO Leslie Moonves have had an exploratory discussion about merging the two media companies, sources familiar with the situation told Reuters on Thursday.

The discussion is a potential first step toward a recombination of CBS and Viacom. The boards of both companies have regularly scheduled meetings in the next several weeks and are expected to discuss the potential merger, the sources said.

The discussion between Bakish and Moonves, which took place earlier this month, was preliminary and no decisions have been made, but it signals that Moonves, who has had reservations about a potential deal between the companies, could be more open to the idea.

The sources wished to remain anonymous because they are not permitted to speak to the media. Viacom and CBS declined to comment. A spokeswoman for Shari Redstone declined to comment.

CBS and Viacom explored and decided against a merger in 2016, at the urging of its controlling shareholders, ailing 94 year-old media mogul Sumner Redstone and his daughter Shari Redstone. Those merger talks failed due to concerns by CBS’ directors and Moonves over the financial sense for CBS shareholders and governance issues.

Shari Redstone has continued to discuss with executives at both companies her desire to merge the two, which has gained steam since Walt Disney Co announced in December it would acquire a majority of Twenty-First Century Fox Inc’s assets, sources have told Reuters.

A combined company with CBS, which owns cable networks including Showtime as well as the CBS TV Network and CBS TV Studios, and Viacom, whose businesses include Paramount Pictures, Comedy Central, Nickelodeon and MTV, would have more negotiating leverage with cable and satellite companies.

“Scale matters now and is going to continue to matter in the future,” Shari Redstone told an audience at a luncheon at the Paley Center for Media in New York City last fall when asked about a potential CBS merger.

In a world with video streaming service Netflix Inc, which has a market capitalization of $113 billion and is dominating the media landscape, there is more pressure than ever on CBS and Viacom to merge, said Rich Greenfield, an analyst at BTIG.

CBS and Viacom combined would have a market value of more than $37 billion.

“There is an urgent need for scale,” he said. “And both companies are facing challenges that a combination could help address,” Greenfield said. “It is eat or be eaten.”

Bakish is expected to have a senior role at the combined company if the two companies agree to a merger, sources said.

Since he took over Viacom in late 2016, Bakish, 54, has improved relations with distributors, found financing for Paramount Pictures after Chinese investors dropped out and shuffled programming.

Even so, Viacom’s stock has been trading around $33 a share, below the $35 to $38.80 range it was trading at when it and CBS explored a merger in late 2016.

Viacom shares were last up 1.8 percent in afternoon trade. CBS shares were up 0.5 percent.


Also, from Variety:

CBS Corp. and Viacom Inch Closer to Formal Merger Discussions

CBS Corp. and Viacom are inching toward formally exploring a corporate reunion of the two halves of the Redstone media empire.

There is less opposition within CBS Corp. this time around compared to the last attempt by CBS/Viacom vice chairman Shari Redstone to bring the two companies back together in the fall of 2016. The early rumblings are that CBS would acquire Viacom in an all-stock transaction.

There are still big hurdles to clear in terms of valuation for Viacom, given the systemic concerns around its lower-profile U.S. cable networks, but there is also an understanding that the media landscape is changing fast and the potential for the two sides to work together on international growth initiatives provides rationale for a reunion. Viacom’s share price has also tumbled further during the past year, making a deal more attractive on a financial basis for CBS shareholders. As of Thursday, Viacom had a market cap of $13.8 billion, with shares closing at $33.61. CBS is valued at $22.7 billion, with shares closing at $59.27.

Sources close to the situation emphasize that neither side has yet engaged bankers or advisers to hammer out an agreement. But CBS Corp. CEO Leslie Moonves and Viacom CEO Bob Bakish have had at least one discussion about the possibility of merging, according to a Reuters report Thursday.

Media reports earlier this month that Redstone was poised to nudge the two companies into merger discussions raised some hackles at both companies. But after the emotions settled, the positive attributes of a reunified company are said to have become clearer for both camps. It’s understood that Moonves would run the combined operation with Bakish serving as a key corporate lieutenant. In 2016, the merger discussions initiated by National Amusements, the Redstone family holding company, came before Bakish was appointed as permanent CEO and Viacom was still reeling from the public legal battle between the Redstones and former Viacom CEO Philippe Dauman.

CBS and Viacom were first brought together in 2000 by Sumner Redstone, now chairman emeritus of both firms. The two were split up again in January 2006 out of Sumner Redstone’s frustration with a sagging stock price.

Moonves and Bakish have had a cordial relationship over the years. The two came to know each other after Viacom acquired CBS in 2000, when Bakish was running Viacom’s international channels division.

CBS’ management team has had a storied run of maintaining its status as the nation’s most-watched network, building Showtime into a major player, expanding its TV production activity, and diving into the OTT arena with CBS All Access. The expectation is that a recombined CBS and Viacom would have a stronger balance sheet to compete for talent, M&A opportunities, and for the pricey sports rights that have been crucial to CBS’ ability to wring top dollar out of MVPDs in retransmission consent deals.

For CBS, access to Viacom’s Paramount Pictures unit would help CBS’ Showtime pay cable network. The general streamlining of overlapping operations could yield savings of as much as $500 million, according to analyst Michael Nathanson of MoffettNathanson.

The downside for CBS is that the enlarged company would be the antithesis of the strategy that the Eye has touted to investors for years. CBS Corp. and its handful of channels anchored by the mothership broadcast network has been able to command top dollar from MVPDs in retrans and carriage agreements because it has been able to drive hard bargains for two must-have channels: CBS and Showtime. Adding Viacom’s 25 domestic cable channels would change the dynamic of discussions with traditional and upstart MVPDs considerably.

Under Bakish, however, Viacom has taken big steps to channel most of its programming resources into six flagship cable brands — Nickelodeon, MTV, VH1, BET, Comedy Central and Paramount Network (the rebranded Spike TV that debuted last week). Undoubtedly, it is only a matter of time before Viacom begins to shutter some of its lesser channels which are already losing distribution as MVPDs take a harder line in dealmaking and consumers embrace skinnier, cheaper bundles.

A deal between CBS and Viacom would also remove a hurdle to future M&A activity. It’s understood that the Redstones had previously balked at dealmaking opportunities involving CBS Corp. unless Viacom was also in the mix.

Reps for CBS, Viacom, and Shari Redstone declined to comment. The companies will likely have to acknowledge the brewing discussions by the time that both report earnings for the fourth quarter of 2017. Viacom is up first on Feb. 8, followed by CBS on Feb. 15.


Update – From Reuters UK:

CBS board to discuss potential Viacom merger on Thursday: sources

CBS Corp’s board is expected to discuss a merger with Viacom Inc on Thursday, sources told Reuters, a move that could begin a formal process to reunite the companies split by controlling shareholder Sumner Redstone more than a decade ago.

The board will need to decide if the deal is now attractive enough to CBS shareholders to overshadow concerns that scuttled a proposed tie-up pushed by Sumner and his daughter Shari Redstone in 2016.

The CBS board meeting is regularly scheduled and no announcement may come out of it, said the sources, who wished to remain anonymous because they are not permitted to speak to the media.

Viacom and CBS spokespeople declined to comment.

Viacom Chief Executive Bob Bakish and CBS CEO Leslie Moonves talked about the potential merger earlier this month, Reuters reported.

Viacom’s Nickelodeon and MTV networks and Paramount films could help broadcast-focused CBS’ All Access streaming service become more competitive, and the combined company could also better negotiate with cable and satellite distributors.

“They might be better able to develop more robust OTT offerings faster as a combined entity,” said Michael Nathanson, analyst with Moffett Nathanson, referring to “over the top” streaming.

Some could argue Viacom’s international presence is now more important for CBS given the rapid decline in U.S. cable subscriptions, some analysts have noted.

Walt Disney Co’s recent deal to buy Twenty-First Century Fox Inc assets has stoked a fresh push from Shari Redstone to rejoin the companies her father split in 2006.

Bakish has improved distributor relations, found financing for Paramount Pictures after Chinese investors dropped out and shuffled programming since taking over Viacom in late 2016.

But Viacom shares trade around $33, below a $35 to $38.80 range when the merger was last on the table, potentially making a deal more feasible.

CBS and Viacom last explored merging at the urging of ailing media mogul Sumner Redstone, 94, and Shari Redstone, who control both through privately held National Amusements.

Moonves and CBS’ board had concerns over corporate governance and the deal’s financial rationale, and the Redstones called off the effort in December 2016.

For CBS, which owns the CBS network, local broadcasters and Showtime, taking on cable networks could mean a difficult integration and tough negotiations, said Tim Nollen, analyst with Macquarie Research.

Merging for size alone may not make sense in the long term, and CBS could be better off on its own, some analysts cautioned.

Viacom shares were down 0.4 percent in afternoon trade. CBS shares fell 1.8 percent.


Also, from Reuters UK:

CBS, Viacom form special committees to explore merger

CBS Corp and Viacom Inc have formed special committees to explore a merger, the companies said on Thursday, the first step in potentially reuniting the companies split by media mogul Sumner Redstone more than a decade ago.

In separate statements, each company said that there is no assurance that the process will result in a transaction, and they would not comment further until the process is completed.

The companies had previously explored a merger in 2016 at the urging of ailing 94-year-old Sumner Redstone and his daughter Shari, who control CBS and Viacom through privately held National Amusements Inc.

Those talks failed due to concerns by CBS’ directors and Moonves over governance issues and the deal’s financial sense for CBS shareholders.

But Shari Redstone has continued to discuss with executives at both companies her desire to merge the two, which intensified after Walt Disney Co announced in December it would buy a majority of Twenty-First Century Fox Inc’s assets, sources have said.

“National Amusements supports the processes announced by CBS and Viacom to evaluate a combination of the two companies, which we believe has the potential to drive significant, long-term shareholder value,” the company said in a statement.

CBS Chief Executive Leslie Moonves and Viacom CEO Bob Bakish held discussions in January about a potential deal. The boards of both companies decided on Thursday to begin a formal process to explore the deal through special committees.

The deal would pair CBS’s broadcast network, television studios and Showtime cable network with Viacom’s Paramount Pictures, Comedy Central, Nickelodeon and MTV.

That could help CBS’ streaming service compete with Netflix Inc and boost the combined company’s leverage with cable and satellite distributors.


Also, from the LA Times:

CBS, Viacom boards form exploratory committees to evaluate a merger

CBS Corp. and Viacom Inc.’s boards each have formed special committees to evaluate whether a merger of the two companies would benefit shareholders.

CBS’ decision came Thursday during a board meeting, an important first step in a process that could result in the reunification of CBS and Viacom.

Within a few minutes of CBS’ announcing its move, Viacom separately released a statement saying that its board had taken the same step.

Viacom’s board has “established a special committee of independent directors to evaluate a potential combination with CBS Corp.,” the company said in a statement. “The committee has retained independent legal counsel and is retaining independent financial advisors in connection with this evaluation.”

The two companies are controlled by the Sumner Redstone family. Shari Redstone, daughter of the ailing 94-year-old mogul and vice chairperson of both companies, favors the consolidation. Redstone and her family, through its holding company, National Amusements, control nearly 80% of the voting shares of the two companies.

However, the special committees will be composed of independent shareholders who must weigh whether a transaction would benefit all shareholders.

“National Amusements supports the processes announced by CBS and Viacom to evaluate a combination of the two companies, which we believe has the potential to drive significant, long-term shareholder value,” the firm said in a statement. “National Amusements does not currently intend to make any further comments regarding the process.”

It’s unclear who would run the combined company, if the merger comes together. Although CBS Chief Executive Leslie Moonves has a strong track record managing CBS, Redstone might instead favor Bob Bakish, the executive she tapped to be chief executive of Viacom nearly 14 months ago.

CBS and Viacom are both medium-sized companies in a rapidly changing landscape where huge conglomerates, such as AT&T and the Walt Disney Co., are trying to scoop up media companies to better compete against internet giants Google, Apple, Facebook, Netflix and Viacom owns MTV, VH1, Comedy Central, Nickelodeon and the Paramount Pictures movie studio.

CBS, which owns the CBS television network, TV stations and Showtime, is the stronger of the two companies. Wall Street values CBS at $22.5 billion. Its stock closed up 2.3% to $58.93 on Thursday.

Viacom, which has a market capitalization of $13.6 billion, has been trying to overcome management missteps, including a lack of investment in television programming, an uneven strategy for online distribution and consistently poor-performing movies at Paramount Pictures. Viacom also blundered by buying back its stock at inflated prices.

Viacom shares on Thursday closed down less than 1%, or 21 cents, to $33.21.

The two firms, both based in New York City, were part of the same company until 2006, when Sumner Redstone separated them because he believed that Viacom with its then-powerful portfolio of cable channels would be a growth stock. The more sturdy CBS was expected to pay investors a healthy dividend.

But the television landscape has dramatically shifted since then. CBS has been able to boost its value on the strength of its programming. The company has substantially increased revenue through the fees it charges cable and satellite television distributors who want to include CBS in their pay-TV bundle.

At the same time, Viacom has seen its revenue shrink. As its networks have grappled with lower ratings, Viacom has come under pressure from Charter Communications and other cable providers to reduce its carriage fees.


Also, from Variety:

CBS, Viacom Move Toward Merger Talks as Boards Begin to Evaluate Possible Deal

CBS Corp. and Viacom have taken the first steps toward negotiating a merger as both companies have established special board committees to evaluate a possibility of a deal.

CBS said Thursday its board has assembled a committee of independent directors to “evaluate a potential combination with Viacom Inc.” Viacom said it has “retained independent legal counsel and is retaining independent financial advisors in connection with this evaluation.”

The news came after a regularly scheduled CBS board meeting was held Thursday afternoon.

“There can be no assurance that this process will result in a transaction or on what terms any transaction may occur. Neither CBS nor the committee intends to comment further, until the process is completed,” CBS said in a statement. Viacom’s board issued the same statement.

National Amusements, the parent company of CBS and Viacom, endorsed the moves with a statement of its own. National Amusements president Shari Redstone, who is vice chairman of CBS and Viacom, has urged the companies to consider a reunion, given the pressure in the media landscape by M&A among its traditional rivals — Disney’s acquisition of most of 21st Century Fox and AT&T’s effort to buy up Time Warner — and the entry into the content arena by digital and tech behemoths with extremely deep pockets.

“National Amusements supports the processes announced by CBS and Viacom to evaluate a combination of the two companies, which we believe has the potential to drive significant, long-term shareholder value. National Amusements does not currently intend to make any further comments regarding the process,” the company said.

The statements mark the latest sign that the reunion of the two companies is in the offing. There are still big hurdles to clear in terms of valuation of a deal, given the systemic concerns around the diminishing value of Viacom lower-profile U.S. cable networks. But there is also an understanding that the media landscape is changing fast and the potential for the two sides to work together on international growth initiatives provides rationale for a reunion. Viacom’s share price has also tumbled further during the past year, making a deal more attractive on a financial basis for CBS shareholders. As of Thursday, Viacom had a market cap of $13.6 billion, with shares closing at $33.21. CBS is valued at $22.5 billion, with shares closing at $58.93.

There’s speculation that the deal would be structured as an all-stock transaction with CBS acquiring Viacom. Share prices for both companies were up in after-hours trading following the board announcements.

CBS and Viacom were first brought together in 2000 by Sumner Redstone, now chairman emeritus of both firms. The two were split up again in January 2006 out of Sumner Redstone’s frustration with a sagging stock price.

During the past 14 months under CEO Bob Bakish, however, Viacom has taken big steps to channel most of its programming resources into six flagship cable brands — Nickelodeon, MTV, VH1, BET, Comedy Central, and Paramount Network (the rebranded Spike TV that debuted last week). Undoubtedly, it is only a matter of time before Viacom begins to shutter some of its lesser channels which are already losing distribution as MVPDs take a harder line in dealmaking and consumers embrace skinnier, cheaper bundles. CBS Corp. chief Leslie Moonves has been vocal to investors about the importance of CBS focusing on a few must-have channels in MVPD negotiations rather than having to fight for carriage of lesser outlets.

A deal between CBS and Viacom would also remove a hurdle to future M&A activity. It’s understood that the Redstones had previously balked at dealmaking opportunities involving CBS Corp. unless Viacom was also in the mix. CBS is known to have had merger discussions with Verizon in recent months.


Also, from the Wall Street Journal:

CBS and Viacom, After 12 Years Apart, Again Explore Deal to Recombine

Shari Redstone, who with her father Sumner Redstone controls both companies, believes they need greater scale to compete

CBS Corp. and Viacom Inc. said Thursday that their boards have formed special committees to evaluate a potential merger, a deal that would reunite the two big pieces of the Redstone family’s media empire.

Shari Redstone, vice chairman of both companies, is pushing for a merger, people close to the discussions say. She, along with her 94 year-old father, Sumner Redstone, controls CBS and Viacom, with a roughly 80% controlling stake in each company through their holding company National Amusements Inc.

This is the second time in less than two years that Ms. Redstone has tried to get CBS and Viacom back together, after they split up in 2006.

Ms. Redstone believes both companies need greater scale to better compete against bigger rivals, people familiar with her thinking say. The new push comes as AT&T Inc. tries to acquire Time Warner Inc. and Walt Disney Co. has a pending deal to purchase the majority of 21st Century Fox ’s entertainment assets.

CBS Chief Executive Leslie Moonves has previously resisted attempts to merge with Viacom and people close to him say he is wary of the combination.

In a statement, National Amusements said it supports the moves by CBS and Viacom to explore the deal, “which we believe has the potential to drive significant, long-term shareholder value.”

CBS and Viacom said in statements they wouldn’t comment further on the matter.

Ms. Redstone took pole position in the family empire in 2016 after a power struggle in which Viacom’s earlier management team was ousted.

Now she faces the challenge of setting up both companies for the future, especially Viacom, owner of more than two dozen cable channels including MTV, Nickelodeon and Comedy Central and the Paramount Pictures studio. Viacom was especially hard hit in recent years as young viewers migrated away from its networks.

Merging with CBS is a tempting solution: It would help shore up Viacom’s balance sheet and combine its channels with a valuable portfolio that includes prime-time CBS programming, sports content such as NFL football and the premium cable channel Showtime.

Ms. Redstone reached out to with Mr. Moonves last month to make the case for restarting merger talks, people familiar with the situation said. Ms. Redstone also began pressing for new blood on CBS’s board, the people said.

CBS isn’t opposed to growing, but it isn’t yet convinced that Viacom’s assets are the best path to scale, a person familiar with Mr. Moonves’s thinking said.

Viacom Chief Executive Robert Bakish, meanwhile, has been attempting a turnaround there. When Mr. Bakish was named chief executive just over a year ago, the company was losing revenue, its debt was teetering on junk status, its channels were losing audience and its Paramount studio had just lost nearly half a billion dollars in a single year.

He has tried to right the ship by improving relations with Viacom’s distribution partners, slimming the company’s strategic focus to six flagship cable channel brands, starting a digital content studio and improving collaboration between divisions.

Under Mr. Bakish, Viacom has maintained its cable channel-carriage agreements but it has been forced in some cases to accept lower fees, hurting the long-term outlook for its distribution revenue.

Analysts think Viacom would have greater leverage to negotiate with distributors if it were part of CBS. MoffettNathanson analyst Michael Nathanson said a deal also could offer “substantial cost synergies.”

Others counter that in this case bigger may not be better. “We do not view ‘scale’ as an all-encompassing positive—especially when ‘scale’ just means slapping two completely different companies together just to get bigger,” said Wells Fargo analyst Marci Ryvicker in a recent note.

Both Viacom and CBS had fallen short of analysts’ initial expectations for profitability in 2017—although Viacom fared much worse than CBS—and the pressure to consolidate has only increased, people close to the situation say.

Ms. Redstone believes Mr. Bakish would make sense as Mr. Moonves’s eventual successor at a merged company, the people familiar with the matter said.

Inside CBS, Chief Operating Officer Joe Ianniello is seen as Mr. Moonves’s successor and has a clause in his contract allowing him to leave at the end of this year if he isn’t named president or if someone else is named president or chief executive, according to a regulatory filing.

Mr. Moonves, who is well-regarded by Wall Street, has a few cards to play against Ms. Redstone if he ultimately isn’t convinced that a merger is the right move. According to his contract, he can leave for “good reason” if a non-executive chairman is appointed, or if the board “ceases to consist of ‘original independent directors’ and ‘qualified replacement directors.’ ”

Ms. Ryvicker said in her report that a departure by Mr. Moonves would weigh on CBS shares.


Originally published: Saturday, January 13, 2018.

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