Moonves’ fall could spell victory for Redstone’s merger dream
The toppling of CBS Chairman and Chief Executive Les Moonves clears a path to an eventual merger between the media giant and Viacom, Wall Street insiders said Monday.
While controlling shareholder National Amusements Inc. pledged not to stand in the way of any possible CBS suitor, there aren’t many likely acquirers, the insiders said.
Strategic would-be suitors, like AT&T, either have their hands full with recent pick-ups or are not interested, the insiders said — while Silicon Valley companies are more likely to try to build their own media powerhouse.
Others, like Disney, Comcast and Fox, already own a TV network and are barred by current regulation from buying CBS.
“I don’t think anybody wants to buy CBS other than Viacom,” said BTIG analyst Rich Greenfield. “Netflix has shown in the past that you don’t need to buy TV and movie studios. Verizon said they aren’t interested anymore in CBS and looking instead to [developing] 5G.”
Moonves — who was forced to resign his positions Sunday night under a cloud of alleged sexual misconduct allegations — was the most powerful force pushing back against efforts by Shari Redstone’s NAI to merge Viacom and CBS.
NAI controls 79 percent of the vote in both companies.
Redstone undertook two unsuccessful efforts to merge the two companies to gain scale in a landscape populated by giants like Netflix, Amazon and Apple.
While Redstone promised — as part of the settlement of a CBS-NAI lawsuit — not to press a merger between the two family-controlled entities “for at least two years,” Wall Street insiders see a tie-up between the two companies as inevitable.
“If you’re CBS you’re strategically constrained. They are still subject to Shari Redstone’s will,” Pivotal Research Group analyst Brian Wieser said. “I can’t imagine why someone would go after them [to acquire]. You’d have to offer a really stupid number, otherwise NAI would block it.”
As part of the settlement deal, CBS also agreed to a shake-up of its board. Over the last few weeks, Redstone, board member Robert Klieger and Richard Parsons, who had been nominated in April, put together the new, diverse crop of six members.
“It was a collaborative process,” a person familiar with the matter said on Monday.
New members included Candace Beinecke, Barbara Byrne, Brian Goldner, Parsons, Susan Schuman and Strauss Zelnick. Joe Ianniello, CBS chief operating officer, was elevated to interim CEO.
NAI also agreed to give “good faith consideration” to third-party deals.
The same two-thirds must approve it. After two years, NAI will not approve or consent to a merger of CBS and Viacom unless a majority of directors not affiliated to NAI support the deal.
Even with those rules in place, Wieser said a Viacom/ CBS merger feels likely, given the uncertainty of the future of the two companies and the volatile media landscape.
CBS shares fell 1.5 percent on Monday, to $55.20, while Viacom shares added 9 cents, to $29.07 — signaling investors, who had been against a merger, may be sensing a very Redstone ending to the battle.
Contributions by Richard Morgan