CBS CBS Corp

By Joshua Jamerson 

Sumner Redstone's National Amusements Inc. on Thursday publicly called for the boards of the companies it controls -- Viacom Inc. and CBS Corp. -- to explore a reunion of the media giants, arguing that a combined company could better tackle shifting consumer trends.

A merger would bring the two companies together a decade after they split, and would come after a year of corporate drama at Viacom during which Mr. Redstone's daughter, Shari, has won great sway.

In a letter to the companies that National Amusements disclosed Thursday, the Redstone family holding company said it believed a merger could "allow the combined company to respond even more aggressively and effectively to the challenges of the changing entertainment and media landscape."

National Amusements said the optimal deal would be an all-stock transaction. Neither Mr. Sumner nor Ms. Redstone would vote as directors on the matter or participate in any of the related deliberations. David R. Andelman, a director on the CBS board, also won't participate. The three are directors of National Amusements.

Still, National Amusements said it won't support an acquisition of either Viacom or CBS by a third party. It also won't support a transaction in which National Amusements would have to surrender its controlling position in either company, or a deal in which it doesn't control the combined company.

A representative for CBS said the company has received the letter, and its management and independent directors "will take appropriate action to evaluate what is in the best interest of the company and its shareholders." Viacom said it expects its board will form a special committee of independent directors to consider the request and any proposed transaction.

The move confirms reports that Ms. Redstone is moving to potentially undo the last big strategic move of her ailing father. The proposed reunion would be effectively an admission the split -- intended to free Viacom's then fast-growing cable channels from the drag of CBS's old-school broadcast assets -- didn't pan out as intended.

A merger would bring under one roof CBS, a prime-time ratings juggernaut, and Viacom's struggling networks, such as MTV and Comedy Central, which typically pursue younger audiences that have been drawn to streaming services such as Netflix. Viacom also has been struggling with its Paramount Pictures studio.

Ms. Redstone's call to consider a potential CBS-Viacom marriage comes weeks after she cemented a powerful role in her family's $40 billion media empire. Mr. Redstone, who is 93 years old and in ill health, remains on the board of National Amusements, though he stepped down from his role as chairman of both CBS and Viacom earlier this year amid questions about his mental capacity.

Ms. Redstone, president of National Amusements, rose to power in her father's empire after a bruising struggle that played out this summer. She recently ousted her longtime rival, former Viacom Chief Executive Philippe Dauman, from the boards of both the family holding company and Viacom. Tom Dooley, Viacom's interim CEO, is planning to leave in November.

A merger could provide a strong leader for Viacom in the form of CBS CEO Leslie Moonves, a favorite of media investors. However, Mr. Moonves -- whose support will be critical if a deal is proposed -- has previously expressed skepticism about a merger of the companies.

Shares of Viacom rose 3.8% to $37.94 in afternoon trading, while CBS shares were up 0.9% to $54.61.

Write to Joshua Jamerson at joshua.jamerson@wsj.com

(END) Dow Jones Newswires

September 29, 2016 16:25 ET (20:25 GMT)

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