Viacom, CBS up amid merger discussions

Galtero Lara
Enero 13, 2018

Viacom Inc (VIAB) and CBS Corp (CBS) are not in active merger discussions, although controlling shareholder Shari Redstone has had exploratory conversations with CBS directors about recombining the companies, two sources familiar with the situation told Reuters on Friday. In 2016, Sumner Redstone's National Amusements - of which daughter Shari is president - sent Viacom a letter asking for an all-stock merger with CBS.

BTIG analyst Richard Greenfield, in a January 8 report, went so far as to accuse CBS and Viacom of dragging their feet on a merger - claiming that "aggregate value has been destroyed over the past year of waiting to recombine the two companies".

None of the parties involved are commenting on the record about potential merger talks, but shares of both CBS and Viacom have spiked based on the report. CBS owns the CBS broadcast network, TV stations, premium channel Showtime and a boutique film studio. The two companies underwent a rigorous review before calling things off in 2016. Key Viacom cable channels continue to struggle with ratings declines and accelerated cord cutting.

Compounding matters, Paramount is coming off another rough year, with recent flops such as "Suburbicon", "Mother" and "Downsizing".

The two companies split in 2005, six years after they had merged. Viacom and CBS initially merged in 1999.

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Disney announced plans in December to acquire the bulk of Twenty-First Century Fox's movie and TV assets - part of a plan to compete with digital distributor Netflix and tech giants Apple and Amazon.

People close to the companies quickly cautioned that there was no timetable for a deal, or even if one would happen.

Others have speculated on the prospect of a roll-up of CBS, Viacom and Lionsgate.

Viacom shares closed Friday at $33.76, up $2.95, or almost 10% on Friday.

Still, after-hours trading had Viacom's stock sink 2%, with subsequent reports refuting the initial news.

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