Aug 12, 2019

Reports: CBS and Viacom inch closer to merger deal

Illustration: Sarah Grillo/Axios

A merger deal between CBS and its former sister company Viacom is imminent and might be announced as soon as this week, according to multiple reports.

Why it matters: It could be the first part of a much bigger plan for Shari Redstone, the majority shareholder of both companies. Reports suggest that Redstone is looking to acquire other entities to give the combined company more scale.

The state of play: Sources tell Fox Business and Bloomberg that both boards met this past weekend to work out a few remaining decisions.

  • Board structure: According to Bloomberg, CBS would get six of the 13 board seats in a combined company, while Viacom would get four. That doesn't include one that would go to Viacom CEO Bob Bakish, who is expected to take over as chief executive of the combined company. National Amusements Inc., Redstone's holding company, would also get two board seats — one to Redstone and another to her longtime lawyer Robert Kleiger. The Information reported last week that Strauss Zelnick, CBS' interim chairman, is likely to depart.
  • Leadership: With Bakish as CEO of the combined company, acting CBS CEO Joe Ianniello would head up all of its branded CBS assets, and CBS CFO Christina Spade would retain her role, per a Wall Street Journal report last week on a working agreement.
  • Deal terms: Boards from both companies spent the weekend negotiating the exchange ratio of merger, which could further delay the deal, according to Variety. The companies had previously settled on a price ratio of 0.6135 of every CBS share for every non-voting Viacom share for an all-stock deal, per Bloomberg. Variety reports the discussions this time around value Viacom at roughly $13 billion.
  • Naming: The final name of the combined company is still unknown, but sources tell Fox Business that in the interim, the new company could creatively be called "CBS-Viacom" or "Viacom-CBS."

The big picture: The companies have been dancing around a deal for the past three years, but drama over who would control the combined company has derailed progress.

  • Now that longtime CBS CEO Les Moonves is out, Redstone finally has the leverage to push the deal over the finish line.
  • Redstone and National Amusements can't propose a deal for many more months, according to a 2018 settlement with CBS. However, the settlement doesn't exclude the CBS or Viacom boards from proposing a merger themselves.

Be smart: A combined company would still be small compared to the entertainment giant created through the merger of Disney and most of Fox last year. It'd also be smaller than tech giants like Amazon and Netflix, which are aggressively investing in media and entertainment.

Go deeper: Axios' last update on the CBS-Viacom merger back in June

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