×
You will be redirected back to your article in seconds

Could CBS-Viacom Strife Cause Leslie Moonves to Walk Away?

What would it take for Leslie Moonves to blink and walk away from CBS Corp.?

The stalemate that has emerged between the company and Viacom in their contentious merger negotiations has raised the possibility of Moonves exiting the picture after 23 years at CBS.

CBS without Moonves is an unthinkable prospect to many inside and outside the company. He has become synonymous with the media firm and is renowned for his hands-on management style. He made his name as a programmer extraordinaire who rebuilt CBS in the 1990s, and then cemented his legacy as an industry titan by deftly steering it through the choppy waters of digital disruption.

But a seismic shift at CBS is becoming more plausible as the gulf widens between CBS and Viacom over the valuation of the latter in an acquisition — and the leadership plan for the combined entity.

Shari Redstone, controlling shareholder of Viacom and CBS along with her ailing father, Sumner Redstone, is bringing the two companies to the table for the second time in less than two years. Neither CBS nor Viacom is running to the altar. CBS’ initial reluctance to strike a deal at a chaotic moment for Viacom forced Shari Redstone to back off the re-merger effort in December 2016. This time around, she sees a fast-changing media landscape and a much more stable situation at Viacom. By multiple accounts, Redstone is unhappy with the way the CBS-Viacom talks have played out in the past few weeks, with deal details leaking out via media along with healthy doses of spin.

CBS’ opening all-stock offer on March 30 came in at just below Viacom’s market cap, on the rationale that the premium for Viacom shareholders was already baked into the stock price’s recent run-up from M&A speculation. Viacom responded by asking for a stock-swap ratio that would add another $2.8 billion to the Viacom valuation and keep Viacom CEO Bob Bakish at the combined company as president and chief operating officer under Moonves, who would serve as chairman and CEO.

CBS has made clear its view that Moonves needs to keep intact his proven team of lieutenants, anchored by chief operating officer Joe Ianniello, if the merger is to be successful in the long run.

Redstone’s insistence on keeping Bakish in the mix is a sign of her faith in the turnaround plan for Viacom he has established in his nearly 18 months at the helm. The two, by all accounts, have a strong working relationship. While Redstone has been a vocal supporter of Moonves in her role as vice chair of both CBS and Viacom, the relationship has become strained by the latest round of merger negotiations. Moonves has had a good deal of autonomy in leading CBS Corp. since 2006, whereas Redstone was instrumental in Bakish’s promotion to CEO in December 2016.

As president of the National Amusements holding company that controls nearly 80% of voting power in both companies, Redstone has the authority to bring changes to the CBS Corp. board of directors if the impasse over the Viacom acquisition persists. Redstone proved her ability to meticulously reshape the Viacom board in 2016 amid the embarrassing legal battle with former Viacom CEO Philippe Dauman over control of her father’s estate. Redstone, according to sources close to the situation, has let it be known that she has concerns about the board governance of CBS and what she perceives as its sometimes overly cozy relationship with Moonves.

Evidence of new blood coming to the board was demonstrated April 6 when CBS disclosed that Richard Parsons, former Time Warner CEO, has been nominated to serve on the CBS board, replacing longtime board member Arnold Kopelson. That news came as part of the annual proxy statement that disclosed Moonves’ sky-high compensation of $69.3 million for fiscal 2017. Parsons could be the first of a number of prominent new faces on the CBS board.

Sources close to Redstone maintain that any board changes would be focused on ensuring that the CBS board has a high level of independence and expertise. But the scrutiny has raised the hackles of CBS leaders given the company’s strong track record since it was separated from Viacom in 2006.

All of this adds up to poison in the water for the key players if a CBS-Viacom transaction is to come to fruition. While the bidding process between the special board committees established by CBS and Viacom is expected to play out for at least a few more days, the obstacles and the animus seem to be growing.

If the special committees can’t come to terms and the merger talks end, sources close to the situation doubt that Redstone will back down for good. Which raises the question of how long Moonves would be willing to endure a public struggle after such a storied run. Sources close to Moonves say the CEO, known for his competitive zeal, is surprised and saddened that the negotiations have unfolded in such a messy way. With CBS’ annual shareholders meeting scheduled for May 18 in New York, things could get still messier before they get clearer.

More Biz

  • Sub Pop Cofounder Jonathan Poneman Talks

    Sub Pop Cofounder Jonathan Poneman Talks Legacy and Lifetime Achievement Award

    In its early days, Sub Pop seemed like one of the last record companies on earth that would survive, let alone remain vital, for more than 30 years. They brought Nirvana and Soundgarden to the world, but seemed destined to be forever typecast as the ground zero of grunge, a rock genre that shook the [...]

  • Contract Placeholder Business WGA ATA Agent

    Writers Guild Rejects ATA Offer, Seeks Individual Talks With 9 Top Agencies

    The Writers Guild of America has called off negotiations with the Association of Talent Agents in favor of pursuing individual talks with nine top agencies as it enforces a total ban on packaging fees and affiliated production for agents representing guild members. WGA West president David Goodman announced the guild’s decision to reject the ATA’s [...]

  • Harry Ponsonby and Diane Kamin

    Hollywood’s National Research Group Expands Into Asia (EXCLUSIVE)

    Media research and testing firm National Research Group is this month to open its first office in Asia. The new unit will be located in Singapore and eventually operate across a widely-defined version of Asia Pacific that includes mainland China, Japan and India. Best known for its behind the scenes role in pre-release testing of [...]

  • Jim Gosnell

    APA Claims Texts Were Fabricated in Lurid Sex Harassment Suit

    A former assistant at APA filed a lurid sexual harassment complaint on Wednesday alleging that a partner at the firm sent her graphic text messages and threatened to have her fired when she refused his advances. The assistant, identified in the suit only as Jane Doe, alleges that top management fostered a “toxic, pervasive and [...]

  • Logic Launches BobbyBoy Records as Joint

    Logic Launches BobbyBoy Records as Joint Venture With Def Jam

    Grammy-nominated rapper Logic — aka Sir Robert Bryson Hall II, aka Bobby Hall —has announced a joint venture with Def Jam Recordings for his new label, BobbyBoy Records, which was formerly known as Elysium Records. The imprint’s initial artist roster is comprised of singer-songwriter John Lindahl, Damian Lemar Hudson (featured on “Black Spiderman,” from Logic’s RIAA platinum 2017 album, “Everybody”); Big Lenbo (featured on two previous Logic albums); [...]

  • Shari Redstone Joe Ianniello

    Shari Redstone, Joe Ianniello in Spotlight as CBS and Viacom Pursue Merger Talks Again

    As CBS Corp. nears a formal acquisition offer for Viacom, the actions of two key players — controlling shareholder Shari Redstone and acting CBS CEO Joe Ianniello — will be closely watched in the coming weeks. Redstone’s moves are under scrutiny because of the potential for litigation surrounding a deal that some have criticized as [...]

More From Our Brands

Access exclusive content