Redstone Firm Pulls Support for Merger Of Viacom and CBS -- 2nd Update
December 12 2016 - 11:07AM
Dow Jones News
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)
Copyright (c) 2016 Dow Jones & Company, Inc.
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