Shari Redstone attempts to ignite merger talks as CBS, Viacom stock surges
CBS Corp. stock surged Friday on strong earnings and speculation that controlling shareholder Shari Redstone had offered a compromise to try to nudge along the stalled merger talks with Viacom Inc.
CBS rose 9% to $53.17 a share on Friday after the company reported record revenue in the first quarter. Shares of Viacom, which owns MTV, Comedy Central, Nickelodeon, BET and the Paramount Pictures movie studio, climbed 3% to $30.29.
Reuters reported late Friday that Redstone was trying to fashion a compromise to win over CBS Chief Executive Leslie Moonves by dropping a demand that Viacom CEO Bob Bakish, 54, should have a prominent management role in the merged entity. Bakish’s role has been a major sticking point in talks to reunite the media companies.
However, Viacom and CBS are not close to a deal, according to three people close to the process who were not authorized to speak publicly about confidential negotiations. And it’s not clear Redstone’s concession will remove a key hurdle in the talks.
In recent weeks, negotiations have fallen apart over a valuation of Viacom, Redstone’s demands over who should run the combined company, and a reluctance by CBS to pair with the weaker Viacom.
Analysts have long been divided over whether a merger makes sense.
“We have always liked CBS as a standalone company,” Wells Fargo Securities analyst Marci Ryvicker wrote in a research report early Friday after CBS set a revenue record by raking in $3.76 billion during the first quarter, an increase of nearly 13% over the year-earlier period.
She and other analysts pointed to CBS’ solid earnings to support the company’s position that owning a bunch of cable TV channels might not be a winning strategy in an era of accelerating cord-cutting. Pay-TV companies have reported higher customer losses in the first quarter, and cable channels are most vulnerable to the changing landscape.
Redstone wants the two companies to combine, and this is the second time in two years that she has tried to make a merger happen. Her family controls CBS and Viacom through their investment vehicle National Amusements Inc., and she says the two companies would be stronger together as traditional media companies gird for battle with such technology companies as Facebook, Google, Netflix and Amazon.com.
Redstone has said that she would like Moonves, 68, to serve as chief executive of the combined company for at least two years. But she has been pushing to have her hand-picked lieutenant, Bakish, to serve as the No. 2 at the combined company to position him as Moonves’ successor.
Moonves dismissed that demand because he wants to run the combined company as he sees fit with his own management team, including Chief Operating Officer Joseph Ianniello.
As part of a compromise, Redstone has proposed that Bakish would have a seat on the board of the combined company so that he still would be in line to replace Moonves.
It is not immediately clear whether Moonves would agree to have Bakish installed as one of his bosses after Moonves rejected having Bakish as one of his subordinates.
CBS and Viacom declined to comment. Redstone’s spokeswoman declined to comment.
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