CBS Corp. (NYSE: CBS) chief executive officer Les Moonves is taking a fresh look at combining with Viacom Inc. amid fresh prodding from his most powerful stockholder and a tougher climate for smaller media companies.
CBS and and Viacom said Thursday they have formed special board committees to evaluate a possible merger at the urging of Shari Redstone’s National Amusements, which controls both companies. CBS owns the most-watched TV network, while Viacom is the owner of cable networks including Nickelodeon and Comedy Central.
Earlier talks between CBS and Viacom, which were once under a single corporate roof, collapsed in December 2016, in part over demands for more control by CBS Chief Executive Officer Les Moonves. Since then, though, several film and TV companies have agreed to combine, underscoring the need to grow to gain leverage in fee talks with pay-TV operators and compete with online rivals like Netflix.
“National Amusements supports the processes announced by CBS and Viacom to evaluate a combination of the two companies, which we believe has the potential to drive significant, long-term shareholder value,” Redstone’s company, which holds roughly 80 percent voting stakes in both CBS and Viacom, said in a statement.
Redstone, 63, who assumed control of the companies from her ailing father Sumner, has been pressing CBS and Viacom to combine since September 2016, a decade after they were split into separate publicly traded corporations. Both companies said Thursday there’s no guarantee a deal will result.
Since the previous Viacom-CBS talks fell apart, Walt Disney Co. has agreed to buy cable, film and TV assets of 21st Century Fox Inc. for $52.4 billion, while Discovery Communications Inc., a big cable programmer, is absorbing the smaller Scripps Networks Interactive Inc. for about $12 billion. In addition, AT&T Inc., the largest U.S. pay-TV service, is pressing ahead with efforts to buy Time Warner Inc. for $85.4 billion.
Meanwhile Viacom shares have continued to decline as that company struggles with losses in its film division, sluggish advertising sales and shrinking cable TV audiences.
The stock has retreated for four straight years, though it’s recovered somewhat in 2018 following reports that the merger talks may be revived and was up 1.5 percent to $33.21 in extended trading. Its networks remain popular with younger audiences.
With the No. 1 broadcast network, CBS fared better in this environment, using programming like the National Football League and popular dramas to increase the subscriber fees it gets from pay TV services and attract a growing audience to its All Access online service.
The stock was up slightly in extended trading and is little changed this year.