Merger Talks Between Viacom and CBS Back On

By Douglas A. McIntyre Updated Jan 30, 10:53PM EST · Published Mar 26, 6:50AM EDT

Merger Talks Between Viacom and CBS Back On — © Chris Hondros / Getty Images

For the past several years, there have been efforts to put back together two companies that were separated in 2005. Viacom Inc. (NYSE: VIAB) and CBS Corp. (NYSE: CBS) were split mainly because the shareholder who controlled the combined firm, Sumner Redstone, thought two public corporations would be worth more in the stock market. Talks to merge Viacom and CBS have been restarted, according to the New York Post.

Redstone still controls both companies, but he is very old. His daughter, Sheri, serves on the CBS and Viacom boards and has voting rights at each via a firm called Nation Amusements, which makes her the catalyst for the merger. The chief executive officer of CBS, Les Moonves, who objected to the marriage off and on, is out because of sexual harassment charges. That left interim CEO Joe Ianniello to run CBS. The board is looking for a new chief executive. Robert Bakish is the CEO of Viacom.

The New York Post speculates that the open question about who will run the company is a major part of the marriage negotiations. The merger would be complicated, so a CEO would have to be familiar with the process of how a merger is restructured.

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The merger is a necessity. CBS is primarily a broadcast network with news, entertainment and sports content in a sea of competition that is dominated by companies like Walt Disney, which recently bought most of the assets of 21st Century Fox. AT&T is another giant, which recently bought Time Warner, adding CNN and some entertainment channels and Warner Bros. Viacom is also much smaller than these. It owns several cable television channels. It also owns the Paramount studio. Together, Viacom and CBS might be able to compete against these much larger corporations.

Viacom and CBS also compete with other companies that have built huge libraries of entertainment assets and have begun the process that will allow them to offer live TV. At the head of the pack are Netflix, which has 139 million subscribers worldwide, and the Amazon Prime, which has a streaming media product. Prime has over 100 million subscribers worldwide.

The key issue about a Viacom merger with CBS is less about who should be CEO and more about whether the two companies will be large enough to compete in a world in which there are larger companies with more entertainment assets and larger customer bases.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.