Sumner Redstone and his daughter, Shari, have officially taken a key step toward putting Viacom and CBS back together again.
National Amusements Inc., the Redstone-controlled movie theater chain and investment vehicle, on Thursday sent a letter to the boards of directors at both companies urging them to consider merging.
The letter was expected, and has been considered the long-term goal of the 93-year-old Sumner Redstone and his daughter after they prevailed in an intense power struggle that resulted in the ouster of Viacom CEO Philippe Dauman. National Amusements controls 80% of the voting shares of both firms.
"We believe that a combination of CBS and Viacom might offer substantial synergies that would allow the combined company to respond even more aggressively and effectively to the challenges of the changing entertainment and media landscape," said the letter signed by the Redstones. "As a result, we would like both companies' boards to consider a potential combination of the companies."
Analysts have said a recombination of Viacom and CBS could result in a more formidable media player to compete with the likes of the Walt Disney Co. and 21st Century Fox. Viacom has struggled since it split from CBS in 2006, while CBS has thrived.
The National Amusements letter encouraged an all-stock transaction and said neither Sumner Redstone, Shari Redstone or National Amusements Director David Andelman would vote on any proposed transaction or participate in negotiations.
A deal still may not happen, since the company boards would have to approve any merger. Viacom said in a statement it expects to form a special committee to "carefully consider the request from National Amusements and any proposed transaction." CBS has not yet commented.
National Amusements further said it would not support "any acquisition by a third party of either company or (ii) any transaction that would result in National Amusements surrendering its controlling position in either company or not controlling the combined company."
"We believe moving forward expeditiously, but with due care, is important and we are prepared to be of assistance to the two companies as they explore this possibility," National Amusements said.