cc Wednesday, September 28, 2016 latimes.com/news

CBS-Viacom merger may be closer to reality, thanks to Redstones and National Amusements

By RYAN FAUGHNDER AND MEG JAMES TIMES STAFF WRITER

he oft-foretold reunifica- tion of CBS Corp. T and Viacom Inc. may be moving closer to reality. National Amusements Inc., the theater chain operator and invest- ment vehicle of media mo- gul Sumner Redstone, is poised to call on the two companies to con- sider merging, two people close to the matter said Wednesday. National Amusements, which controls nearly 80% of the voting shares of Viacom and CBS, is preparing a letter to send to the CBS Chief Executive Leslie Moonves, left, with Sumner Redstone at a gala in Beverly Hills in 2012. (Brian To / WireImage) two companies’ boards this week, according to the two people, who declined to be named because the glomerate that would allow Via- Just days later, Rob Moore, vice proposal is private. com to better weather the chal- chairman of Viacom’s struggling Analysts have long expected lenges of the digital age and com- Paramount Pictures studio, was the Redstone family to try to put pete with the likes of Walt Disney ousted from his position. Moore CBS and Viacom back together Co., Comcast Corp.'s NBCUniver- had supported a plan to sell 49% of again. Since the two media giants sal and 21st Century Fox. Paramount to a Chinese investor to split in 2006, CBS and Viacom The latest development comes secure cash and find a strategic have followed starkly different shortly after a major shake-up in partner, but Viacom scuttled that trajectories, with CBS building a Viacom’s executive idea. Paramount is on track to lose broadcast ratings juggernaut ranks. Viacom's interim chief ex- $450 million in the current fiscal while Viacom’s stock fell sharp- ecutive, Thomas Dooley, an- year. ly. nounced last week that he would The continued struggles Reuniting the two could create step down Nov. 15, leaving a vac- at Viacom and lack of obvious a more powerful and stable con- uum at the top of the company. CEO candidates may have acceler- ated National Amusements’ ef- and struggling movie studio. It Viacom’s current market value is forts to spark merger talks, said would likely be up to Moonves to about $14.5 billion. media analyst Tuna Amobi at S&P return the company’s assets to Analysts said CBS would be Global. their former glory. unlikely to pay much of “The handwriting has been It’s a delicate matter for Moon- a premium, if any, to take over there,” Amobi said. “It seems to ves, however. Investors in CBS, Viacom. me they have no choice so far in which has enjoyed a strong run as “There's greater risk for terms of where the companies are one of the few freestanding media CBS, so there has to be a greater and the difficulty of attracting a companies still in existence, may reward,” said Los Angeles invest- CEO for Viacom. Ultimately, if be less inclined to welcome such a ment banker Lloyd Greif. “It has to you're National Amusements, you transaction given the stiff chal- be on Les Moonves’ terms. He have to look at the best scenario to lenges facing Viacom. The broad- holds all of the cards.” create value at both companies as caster owns the premium cable Redstone split his media empire a whole.” network Showtime, a small film a decade ago in part to appease Many experts have said that a unit and 50% of the CW net- two strong-willed executives — merger was the ultimate goal of work, and airs popular shows such Moonves and then-Viacom CEO Redstone’s daughter Shari Red- as “The Big Bang Theory.” Tom Freston, though Freston was stone, who has risen in power Indeed, Moonves has down- forced out nine months after Via- amid an intense battle for control played the mer- com became a standalone opera- of her 93-year-old father’s $40- ger speculation, saying at a recent tion. Viacom was on a stronger billion media empire. That fight investor conference that there were financial footing then than it is to- saw the ouster last month of Chief no direct discussions under- day. ExecutivePhilippe Dauman, who way between the two companies. Amobi cautioned that merging presided over years of struggles at Nonetheless, National Amuse- the two wouldn’t be a cure-all for Viacom, along with multiple ments had been expected to en- Viacom’s woes. board members. courage the companies to consider “It doesn't take away from the Shari Redstone has a strong a deal, said Marci Ryvicker, senior major challenges Viacom faces,” relationship with CBS Chief Exec- analyst for Wells Far- he said. utive Leslie Moonves, who is go Securities who follows the me- Viacom is expected to form a widely respected as one of the dia industry. special committee to review a pos- most savvy programmers in Hol- “We view this as a pretty rea- sible merger in light of the coming lywood. Should CBS take over sonable thing for NAI to do as a National Amusements letter. CBS Viacom, Moonves probably would CBS-Viacom merger is a possible has not yet convened such a com- run the combined operation, giv- option,” Ryvicker wrote in a mittee. ing him oversight of a cable TV Wednesday report. “Not one that Viacom’s shares rose 3% on empire and a major Hollywood we like at the moment, but the fact Wednesday to close at $36.56 after studio. It’s well known that it is being explored is reasona- Reuters first reported the letter was that Moonves has long wanted to ble and not surprising to us.” in the works, while CBS’ stock run a major movie studio. She cautioned that even the en- rose 4% to $54.15. Representatives Viacom, which owns cable couragement of the controlling for Viacom, CBS and National channels such as MTV and Come- shareholder wouldn’t necessarily Amusements declined to comment. dy Central as well as Paramount, guarantee a deal. Sewing the com- stands to benefit most from a re- panies together would be a tricky combination, given its sagging financial maneuver, with Viacom’s stock price, declining cable ratings valuation as one obstacle for CBS.