The third set of merger talks between CBS and Viacom is expected to ramp up as June winds on, and CBS board members are said to have met Friday to begin exploring some of the issues involved in reuniting the companies.
The two companies certainly are familiar with each other, having been under the same corporate roof from 2000-06 and continuing to share the same controlling shareholder, National Amusements. Even so, there still are plenty of unknowns and differences, with points of dispute likely to include the composition of the combined company’s management team and board and the valuation put on the assets.
Two previous rounds of discussions in 2016 and 2018 fizzled, prompting the current regimes to try to keep the situation as quiet as is feasible in a gossipy, M&A-obsessed industry. Even though AT&T-Time Warner, Disney-Fox and a host of other megadeals have reshaped the landscape and upped the sense of urgency for smaller rivals, anyone expecting a speedy agreement between CBS and Viacom should be prepared to wait a beat or three. “There is just a lot to go through, and a lot that must be gotten right,” one insider explains. Breathless speculation about businesspeople “holding high-level meetings” is usually an attempt to make the mundane sound newsworthy. Breaking: Fish swim in water.
Both companies and National Amusements largely have declined any comment on the talks. In an appearance Thursday night at the Paley Center for Media, though, Viacom CEO Bob Bakish was asked about the state of the reunion.
“This is the third time we’re having a conversation about this,” he said. “Our focus in the first time was … stay focused, run the business. Second time, same thing. Third time, same thing. And because of that, the company is in materially better shape from the second time to the first time, and from the third time to the second time.” While issuing the caveat that “we’ll see what happens,” Bakish also made the solo case for Viacom, which he has steered in a decidedly more positive direction. “The opportunity that’s afforded in today’s landscape continues to be very compelling for Viacom.”
Indeed, while previous discussions took place between two companies hobbled by internal cultural issues or outdated business strategies, the 2019 edition sees both entities operating more smoothly. Stock price isn’t everything, but that symbol of perceived value has been fairly flat in recent months, with the declines of the past having stabilized, even though both are well below recent highs. Viacom closed Friday at $29.39, while CBS finished the week at $48.99.
On the management question, most of the smart money is on Bakish to run the combined entity. When former CBS CEO Les Moonves was still in the mix, the preference expressed by National Amusements chief Shari Redstone that Bakish be his No. 2 met with fierce resistance. Moonves, before leaving under a cloud in September amid allegations of sexual assault and harassment by more than a dozen women, challenged the idea of Bakish leapfrogging his own lieutenant, Joe Ianniello.
Since September, Ianniello has been acting CEO of CBS, largely winning admiration from Wall Street for his steady hand on a boat that was rocked by the ouster of Moonves and a nest of scandals in CBS News. Ianniello, an experienced dealmaker and former CFO, had his contract extended recently through the end of 2019 and a sizable contingent within CBS believes he would be the best option given his operational experience.
Ianniello’s close association with Moonves could count against him with some decision-makers, however. If he does not prevail as the CEO pick, those watching the situation from within envision him possibly departing with a large exit package rather than serving in a president or COO-type role.
While Ianniello and Chief Creative Officer David Nevins came into their current roles at roughly the same time and have worked closely together in the months since, they obviously have different functions in the larger organization. Nevins, based in LA, is well-regarded but also new to the corporate C-suite. After running Showtime, he was given the expanded mandate in October of overseeing content across all of CBS Corp.
While the CBS execs have certainly made names for themselves, Bakish has remade the team at Viacom and elevated or hired key exec talent responsible for the turnaround. If given the top job, he is unlikely to want to leave many, if any, of his hand-picked lieutenants behind.