CBS CBS Corp

By Joshua Jamerson and Joe Flint 

Sumner Redstone and his daughter Shari Redstone ended their bid to merge CBS Corp. and Viacom Inc., a reversal that will pressure Viacom to find an alternative plan to turn around its fortunes in an unforgiving media environment.

In a statement Monday, the Redstone family's holding company National Amusements -- which has a majority voting stake in both firms -- said that after reviewing a tie-up, "we have concluded that this is not the right time to merge the companies."

A marriage would have brought the two companies together a decade after they split, and the news comes after a year of corporate drama at Viacom during which Mr. Redstone's daughter, Shari, has won great sway as president of National Amusements.

In late September, National Amusements 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."

Shares of Viacom fell 6.9% in early trading, while CBS fell 2.7%.

A combination would have brought 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.

Neither company had been enthusiastic about a merger and discussions never went beyond a preliminary stage, people familiar with the matter said. CBS and its chief executive, Leslie Moonves, never appeared to be more than lukewarm on the idea and repeatedly told investors that CBS was a strong stand-alone company. Insiders there were concerned about being saddled with Viacom's weak assets.

There were also differences in opinion about how a deal would be structured. Viacom was looking for CBS to pay a premium to acquire it, which was a nonstarter for Mr. Moonves, people close to the talks said.

Viacom, which is on its third chief executive since August, also wasn't relishing remarrying CBS. Robert Bakish, who took over as acting CEO last month, wanted an opportunity to try to fix the company rather than merge with CBS, these people said. Besides its challenged cable networks, Viacom is also starting to overhaul Paramount Pictures, which has become a laggard in the movie industry.

In the statement Monday, National Amusements called for a focus on the companies' "independent paths forward."

The Redstone firm said it is encouraged that the companies can thrive separately, citing Mr. Bakish's "forward-looking thinking and strategic plan" and confidence that Mr. Moonves could continue to deliver strong results there.

Remaining separate companies puts more pressure on Viacom to perform than on CBS, which has performed better in recent years thanks to the strength of its broadcast network and Showtime cable channel amid a growth in fees from pay-TV distributors. It is also in the process of shedding its CBS Radio unit. Meanwhile, Viacom has remained plagued by continued soft performance at its networks and a weaker showing at the box office.

Write to Joshua Jamerson at joshua.jamerson@wsj.com and Joe Flint at joe.flint@wsj.com

(END) Dow Jones Newswires

December 12, 2016 10:52 ET (15:52 GMT)

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