CBS and VIACOM GETTING TOGETHER. CBS is Preparing an Offer for Viacom – By Todd Horwitz, Bubba Trading

 

CBS Corp. is preparing to make an offer for sister media company Viacom Inc. in the coming weeks, following a meeting of CBS directors last week in which a potential deal was discussed, according to people familiar with the situation. Representatives of CBS and Viacom have already had preliminary discussions about the outlines of a deal, one of the people said. If the companies move ahead with talks, it would be a third attempt to reunite the media empire that was divided by mogul Sumner Redstone more than 13 years ago.

A deal is far from certain. Determining the price for a stock transaction—which requires setting a value for the companies relative to each other—is one major hurdle. Picking a new leadership team is another challenge. Viacom Chief Executive Bob Bakish is widely believed by people close to the process to be in pole position to become CEO of the combined company. There is debate and discussion already about how the rest of the management team would fill out, people familiar with the situation said.

The merger of CBS and Viacom, which seemed like a foregone conclusion for much of 2016, was put on hold in December of last year by National Amusements, which owns 80% of the voting shares of both Viacom and CBS. The companies again agreed to explore a merger in February 2018, but those talks derailed and resulted in CBS suing majority owners Sumner and Shari Redstone that May. Last September, just before their Oct. 3 court date, the companies reached a settlement on the same day as Moonves’ exit.

As part of that settlement, National Amusements agreed to not pursue a merger between CBS and Viacom for two years, but the CBS board, not National Amusements, initiated these most recent talks.

Shari Redstone, vice chairman of both companies, believes that CBS and Viacom would be better positioned to compete with larger rivals as one company. She is president of National Amusements Inc., which controls both CBS and Viacom. Viacom has been the weaker of the two companies over the past several years, having suffered as cable-TV cord-cutting pulled down ratings for its major networks. A merger with CBS would give Viacom greater scale and more leverage in negotiations with advertisers and cable-TV providers.

Todd “Bubba” Horwitz

IN ASSOCIATION WITH

Financial Markets and Political Commentary
 

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About the author

Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.