CBS And Viacom Stocks Both Sink As Merger Deal Nears Close – Update

Viacom, whose stock closed at $28.53 Monday, has a market value of about $12 billion. Shares of both companies are controlled by National Amusements. Accordingly, the terms being worked out in recent days have had CBS giving a bit less than two-thirds of a share for each full non-voting share of Viacom. CBS, which finished the day at $47.91, has a value in the $18 billion range.
It also is likely to position National Amusements chief Shari Redstone in a seat of increased power, a noteworthy perch for a female executive. The merger joins two longtime media powers, putting Paramount Pictures, the CBS broadcast network and cable assets like Showtime and Nickelodeon under the same corporate roof. The tangible effect of the deal on the industry, though, is likely to differ substantially from the Disney-Fox and AT&T-Time Warner shock waves that have brought thousands of layoffs and re-ordered the Hollywood cosmos.
The companies earlier had reached significant clarity about the management structure, agreeing that current Viacom CEO Bob Bakish would run the combined company, with acting CBS chief Joe Ianniello in a top role. The boards of both companies worked through the weekend to hammer out terms of their long-expected reunion, with the amount of stock being exchanged between the companies remaining the main sticking point.
This is the third round of formal merger discussions since 2016. Sources familiar with the talks say a deal is likely to be announced this week, though they cautioned that it would still be possible for negotiations to end without a final resolution.
UPDATED with closing stock prices. Shares of CBS slipped 2% after early gains and Viacom's dropped 5% Monday as investors reacted to word that the companies were near the finish line in their merger negotiations.
Television dominates the business activities of both CBS and Viacom, but the final-stage negotiations took place on a weekend when films released by the companies captured two of the top four spots at the domestic box office. 2 with $20.8 million. Paramount's Dora and the Lost City of Gold took fourth place with a $17 million opening weekend, and CBS Films' Scary Stories to Tell in the Dark finished No.
Also, while certainly more of a force together than apart, CBS and Viacom together are still a fraction of the size of top media rivals like Disney and Comcast, which in turn are many times smaller than the tech giants invading their turf. Viacom and CBS have minimal overlap in their operations, with Wall Street analysts identifying at most $500 million in cost savings, largely in administrative and back-office areas. 2 player, after Comcast. Even so, in the U.S. TV advertising market, the combined CBS and Viacom will become the No.
Reps from CBS, Viacom and National Amusements declined to comment when contacted by Deadline.” />
In 2006, when the companies split, CBS shares were worth an adjusted $26, while Viacom traded at $41.50. Sumner Redstone initiated the breakup because he believed high-flying Viacom was constrained by CBS, whose broadcast portfolio seemed the more sluggish of the two. It turned out the roles were reversed, with CBS riding its top-rated broadcast network, retransmission consent revenue and improved Showtime premium network to better stock-market performance overall than Viacom's.
Viacom's stock price has risen 12% for the year thus far, as investors have started to recognize Bakish's turnaround efforts at the company after a genuine crisis in the middle of this decade. CBS shares have had a volatile couple of years, but are up 7% in 2019 to date as the company has grown more stable. Ianniello replaced longtime CEO Les Moonves last September after Moonves was accused of sexual assault and harassment by more than a dozen women. Its cable networks at that time were fading fast and the corporate suite was a nest of intrigue with Sumner Redstone, the 96-year-old architect and then-chairman of the company, in open warfare against his former protégé, CEO Philippe Dauman.

CBS And Viacom Set Merged Management Structure To Play To “Strongest Strengths”

The boards of the companies have circled that date as when they could formalize a deal. If parties are unable to finalize the new blueprint, the companies will report their earnings as scheduled and speak to Wall Street analysts on the regular quarterly call. If a deal is formalized, a merger conference call would likely take the place of the usual quarterly call. Both CBS and Viacom are scheduled to report quarterly earnings next Thursday. Still, key details such as the exchange ratio — how many shares of CBS and Viacom will be traded to create the new entity — have not been locked down.
9," when the two companies could effectively become one and the chemistry experiment begins. In addition to Davis, the management plan for several business units is still coming into focus. A different corporate source tells Deadline that "it isn't August 8 we're concerned about; it's Aug.
CBS and Viacom appear to have settled the question of who will run the combined entity when the Great Reunion finally occurs, perhaps as soon as next Thursday.
Wade Davis, who has been Viacom CFO, is under consideration for a broader operational role in the new company given his stewardship of certain initiatives beyond finance such as Pluto TV and advanced advertising. Christina Spade, who was appointed CFO of CBS last year amid a widespread post-Moonves restructuring, is set to take on the same role for the new entity. If a position that situates him beyond finance cannot be agreed to, sources tell Deadline, Davis could exit the company.
One of his gripes was Redstone's insistence on giving a key role to Bakish, a longtime Viacom executive who succeeded Philippe Dauman as CEO in late 2016. The projected installation of Bakish in the top spot comes just a year after former CBS boss Les Moonves went to legal war with Shari Redstone, head of CBS and Viacom controlling shareholder National Amusements. Moonves, who was ousted last fall after multiple allegations of sexual misconduct by a dozen women, always insisted on Ianniello as his lieutenant and balked at Bakish taking priority.
Sources close the situation tell Deadline that the new planned management structure — which moves away from previous designs providing for a clear No. Ianniello, in a similarly long stint at CBS, has engineered a number of key deals on the retransmission and distribution fronts, and has earned high marks for stabilizing the company during and after the exit of former CEO Les Moonves. 2 executive — is an effort to “draw from our strongest strengths.” Bakish has spent two decades at Viacom and has effected a turnaround since taking over as CEO in late-2016.
The Wall Street Journal had the first report on the management plan.” />
Joe Ianniello, who has been acting CEO of CBS, will continue to run the CBS assets in a senior role. Bob Bakish, currently CEO of Viacom, is in line to head the merged company, sources familiar with the proposed structure tell Deadline.
CBS, Viacom and National Amusements all declined to comment on the latest merger outlook.
Analysts have estimated the combined entity could realize about $500 million in costs synergies. Areas that are apt to see the most cuts will be in the administrative and back-office areas of the businesses, given that the day-to-day operations of the two companies are largely complementary.
CBS was seen as the laggard, with legacy broadcast assets making it less enticing to investors. Over time, the roles reversed and the sum of the parts often seemed less than the whole. The timing of a merger announcement remains less than certain. Still, the deal finally seems to be coming down the home stretch after years of back and forth between the companies, which operated under a single corporate roof from 2000 to 2006. Viacom at the time was the higher-flying of the two, printing money from carriage fees and advertising with streaming still years from wreaking havoc. Two formal rounds of merger talks had been held over the past few years once it became clear that the decision by Sumner Redstone, the 96-year-old chairman emeritus of the companies, to split them apart had not been a success.
CBS stock finished the week at $50.40, down a fraction. Viacom stock spiked in the final minutes of Friday trading as the news began to hit the wires. CBS is worth $18.9 billion. Even together, they will still be a fraction of the size of Disney or certainly media parents like AT&T or Comcast, leading many investors to speculate that further dealmaking is a certainty. According to recent prices, Viacom has a market value of $12.4 billion. Shares finished at $34.59, up a fraction.

Peter Bart: Viacom And CBS Teeter Toward Merger With Their Master Dealmaker On The Sidelines

Instead he is confined to bed in his sprawling contemporary mansion that sits atop Beverly Hills, unable to talk or walk. Given his addiction to corporate intrigue, Redstone himself would doubtless yearn to inhabit a seat at the table. Bankers cannot recall a parallel corporate drama in which a patriarch, while still alive, was rendered mute over key merger decisions. Buried in his brain is the knowledge that he still could ignite what one attorney describes as “bombshells” buried in trust documents, possibly scuttling dealmaking prospects.
impose inhibitions on future maneuverings, given that he and his daughter, Shari, still control by far the most shares in this public company.
Sumner Redstone always liked to tell friends, “I will live forever,” but, as one long-term friend confides, “is this really a life or a dim after-life?” Once a man who loudly demanded order and discipline, Redstone’s after-life has wallowed in sordid confusion. Yet displays of his art collection at museums still carry women’s names in "presentation credits," as in a film. One, Manuela Herzer, was ordered by the court to pay back $3.25 million. On a personal level, intrigues involving girlfriends have been settled through multimillion-dollar payoffs.
Attendees pledge not to disclose deliberations. And no one ever alludes to the fact that there is a ghost in the room. The meetings are conducted with the secrecy of a national security briefing. Attorneys steadfastly stonewall reporters who try to probe the proceedings.
Now both are in troubled waters – CBS lost a quarter of its value in 2018 and has yet to recover –and Sumner’s likely would have been the loudest voice reminding everyone of that reality.
At stake is a $30 billion merger of two revered publicly held companies, CBS and Viacom – a deal that will likely trigger a new cycle of corporate mega-deals, perhaps reshaping the landscape of the media industry.
Even in his early 90s he would still hold court about the foibles of his competitors – Rupert Murdoch was a favorite target – and pledge revenge on those who had failed him. He liked screening films for friends on Sunday afternoons and readily vented his criticisms, even on Paramount films (“My own company wants to bore me with crap like this,” he would declaim).
Would he favor a merger if he were now at the table? After all, this is the third time in four years that directors have explored that objective. After the last foray, a judge elicited a pledge that the two companies could unite only if two thirds of the CBS board favored it. Both companies were in stronger shape when the earlier merger initiatives were advanced.
On a corporate level, shareholder value has been compromised by management turnover and swerving strategies. Names of past executives lie in the dust — Philippe Dauman, Les Moonves, Mel Karmazin, Tom Freston and Brad Grey among them. Redstone's mythic corporate conquests have long since faded into the mist. The famous mid-’80s battles for control of Paramount, pitting him against foes like Barry Diller and John Malone, were passionate and bitter. Wall Street felt he overpaid on the deal, but they arguably were proved wrong.
He would bellow orders at waiters so loudly that some managers banned him, but $200 tips were welcomed. Business was conducted in a loud roar, but he also would sustain cordial conversations with friends, and loved making his rounds of favored restaurants, like Dan Tana’s or Spago – I was an occasional companion. The Redstone heyday was one of sustained truculence.
His eyes flickered weakly, but his effort at conversation was reduced to a grunt, mixed with an occasional scream of rage and frustration over his limitations. When I visited with Redstone three months ago, his withered hand signaled a greeting, or the semblance of one. His fingers could peck out limited responses – a "yes" or "no" – on a specially rigged computer.
His presence still hovers over the company, but his mental health is the subject of litigation, as is his potential influence over the deal. His secret trust documents may It’s Sumner Redstone, age 97, the master dealmaker responsible for creating the teetering corporate edifice. And the ghost?
That is, if ghosts could talk.” />
Fed intravenously, his cognitive skills are clearly impaired. A team of nurses and conservators stand by for needed assistance. Still, his attorneys argue that, with medical support, he retains lucidity and understanding.