One prominent media analyst is calling on Shari Redstone’s National Amusements to hold a public auction for CBS to determine its fair market value and help evaluate whether Viacom is the best match. “It’s up to Shari Redstone to chose between winning the battle and losing the war,” wrote Needham & Co.’s Laura Martin.

Martin told Deadline that “it would be irresponsible” for National Amusements to press for a merger with Viacom before hiring an investment banker and holding a legitimate auction to establish a benchmark price for the Tiffany Network. This process would help determine whether combining the corporate siblings results in the best outcome for shareholders.

Shari Redstone
Redstone
REX/Shutterstock

To do otherwise, Martin wrote, risks “lawsuits galore.”

National Amusements, which controls 80% of the voting shares of both CBS and Viacom, declined to comment. But it has said it won’t force a merger without the support of both companies. In any event, deal talks will likely be suspended as the courts evaluate yesterday’s vote by the CBS board to diminish National Amusements’ voting power. Redstone’s holding company changed CBS’ bylaws ahead of yesterday’s meeting to require the support of a supermajority of directors for such measures. By that standard, this vote failed. CBS insists the change doesn’t take immediate effect.

Lawrence J. Haverty of Gabelli Multimedia Trust told CNBC this morning that investors know what they’re getting into when they take a stake in a company like CBS, which has dual class shares of voting and non-voting stock.

“Clearly these dual class shares can be very very treacherous to an investor, but if you buy them, you understand that that’s a risk that you take,” Haverty said. “You throw your hat in the ring with management, if it’s Google and Facebook, you win. If you throw in with Bon-Ton Stores, you get totally wiped out. But, the structure is legal and it will be upheld by the court and I would be betting against Moonves here and I think he is going to leave.”

Martin wrote that a sale to an Internet platform or telco like Verizon Communications, which a year ago had expressed interest in acquiring CBS, would result in a meaningful premium — say 30%, or $70 a share — or for the network’s library and management team.

“The worst case for all shareholders, in our view, is any scenario where Les Moonves leaves CBS,” Martin wrote.

Les Moonves
Moonves
REX/Shutterstock

Moonves is well-regarded by the media, admired by employees, investors and advertisers — as evidenced by the standing ovation he received at this week’s upfront presentation to a group of 2,000 advertising executives, Martin wrote. An outcome that causes the CBS chief executive to head for the exits would likely produce a stock drop of 15%, resulting in a $10 billion loss of value for shareholders (with 90% of that borne by public shareholders), Martin forecast.

“It’s not so easy to find a new guy to do the job,” wrote Martin. “As evidenced by Disney, which still can’t find a successor to Bob Iger after looking for the past seven years.”

Viacom CEO Bob Bakish could be a sacrificial pawn in this corporate chess game, Martin writes. He’s doing good work at the media company, attempting to reverse years of decline at the film studio and cable networks. But if forced to run a combined CBS-Viacom, she predicted he would become the “Dark Shadow of Media,” a guy everyone loves to hate because he replaced Moonves.

Martin says Viacom could be sold now, or perhaps in a year or two, after Bakish completes the promised turnaround. But she said combining Viacom and CBS would not achieve National Amusements’ stated goal of creating a company large enough to withstand the threats of the FAANG companies — tech giants Facebook, Apple, Amazon, Netflix and Google — which are spending billions on premium film and television content to disrupt the media landscape.