×
You will be redirected back to your article in seconds

CBS-Viacom: When a Merger Amounts to a Shotgun Wedding

America’s favorite on-again, off-again relationship might be back on.

No, not Justin Bieber and Selena Gomez; CBS Corp. and Viacom. The companies’s CEOs held an informal talk last week about a potential merger with the expectation that their respective boards will tackle it in greater depth soon enough.

We’ve watched these two companies play footsy with each other for so long that their dynamic has taken on that classic will-they-or-won’t-they? formula from your favorite romantic comedy.

But there’s a plot twist this time around. Tired of flirtations that went nowhere in late 2016, National Amusements president Shari Redstone seems ready to officiate a shotgun wedding. With controlling stakes in both companies, she’s nudging CBS CEO Leslie Moonves and Viacom CEO Bob Bakish to the altar whether they like it or not.

It’s not difficult to see why Redstone has changed her tune from letting these lovebirds go their separate ways to a forced reunion. Look at pending mergers between AT&T and Time Warner, Disney and Fox, and Discovery and Scripps. Everyone in the sector is mating like rabbits to achieve the kind of scale that gives them a fighting chance against the tech world’s colossi.

But while the peer pressure to couple up is enormous, does that mean CBS and Viacom would be getting together for the right reasons? Maybe not.

Who could blame Moonves for having cold feet considering the distressed state of Viacom. While Bakish deserves credit for wiping away plenty of the dust and rust that have collected on the once-great brands in his portfolio like MTV and Nickelodeon, the sad fact is that the neglect they suffered under for too long during the Philippe Dauman era will take many more years to reverse. Had one true hit emerged from his networks or movie studio this past year, he might have bought himself more time to go it alone, but Bakish didn’t end up that lucky.

And even had he miraculously managed to pull off a quicker turnaround, that would really be besides the point. The linear-network business model that made Viacom so successful for so long seems headed for extinction. Taking on Bakish’s portfolio would dilute the double-digit growth of his beloved retransmission fees.

If Moonves is having problems with commitment, that may have something to do with the fact he’s still playing the field: Verizon, Lionsgate and Sony are just a few of the names CBS is rumored to have talked with about M&A possibilities. But Redstone is highly unlikely to OK a deal that doesn’t have Viacom attached.

But given the shortage of logic dictating a CBS-Viacom deal, it’s tempting to wonder whether such a merger shouldn’t be looked at in a vacuum but as the prelude to yet another deal that combined with another property like a Verizon doesn’t seem so ill-conceived anymore. In this consolidation-crazy era, some Voltron-esque combination of multiple conglomerates doesn’t sound as far-fetched as it once might have.

A good merger should make 1+1=3. CBS and Viacom alone feels more like 1.3.

In the direct-to-consumer world Big Media is headed, CBS has moved shrewdly and aggressively with a multi-pronged brand strategy led by CBS All Access. But what would Moonves do to energize Viacom for that same world given its heavy unscripted library isn’t built for SVOD licensing, where scripted rules, or skinny bundles, where the absence of news and sports is a huge disadvantage.

Moonves would have to reinvent how Viacom’s brands make money to truly rejuvenate them, and that’s one tough pivot to pull off.

Of course, Moonves may be willing to take on that challenge if he’s handed the reins of the combined company under deal terms that won’t make his shareholders revolt. Moonves has a ton of leverage here. He has enough credibility with Wall Street that his departure from the company could punish these stocks at a time when their combination is intended to lift them. But that doesn’t mean Redstone isn’t willing to risk going on without him, perhaps calculating that Bakish has done well enough over the past year to keep investors from freaking out if Moonves leaves.

The power struggle between him and Redstone is a delicate dance, as evidenced by last month’s Wall Street Journal report suggesting she was ready to restock CBS’s board of directors.

Playing hardball in the press may come with the M&A territory but it sends exactly the wrong message to the market considering the tortured history of boardroom shenanigans these companies share. Just when Bakish has done so much good work to stabilize Viacom, the proceedings are threatening to devolve into the kind of dysfunctional mess that marked the Dauman era.

If all parties aren’t careful, the circus atmosphere that overtook Viacom for too long will return in force and destabilize a deal they may have no choice to make despite the inherent difficulties. But this can’t be rushed because there’s a lot at risk.

After all, you can’t hurry love.

More Biz

  • China's Alibaba to Take Majority Control

    Alibaba to Take Majority Control of Alibaba Pictures

    Chinese e-commerce giant Alibaba is to take majority control of its films unit Alibaba Pictures. The $160 (HK$1.25 billion) deal was announced on Monday. The companies said that Alibaba will increase its stake in Hong Kong- and Singapore-listed Alibaba Pictures, through a share subscription. It will lift the parent company’s stake from 49% to 51%, [...]

  • Guy Moot

    Is Sony/ATV’s Guy Moot Headed for Top Job at Warner/Chappell?

    Ever since Jon Platt announced in September that he will be stepping down from his post at the helm of Warner/Chappell Publishing to take the top job at Sony/ATV when Martin Bandier’s contract is up at the end of March, speculation has been rife about who will take over for him. One name has been [...]

  • The King Eric Clapton A Life

    Rashida Jones, Lili Zanuck Talk Grammy Nominations and the Music-Documentary Gold Rush

    Nothing takes you back to time and a place like the music of a particular era. That’s one big reason why music documentaries are flourishing at a time of enormous demand for high-end docu productions. This year’s five Grammy Award nominees for best music film reflect the appetite for stories about renowned and beloved musical figures, [...]

  • il bussetto best business card holder

    Office-Appropriate Gifting: The Best Gifts For Your Colleagues and Bosses

    You can do better than a handshake or bottle of wine to wish your boss a Happy Holiday this season. Here are 10 gifts that show your appreciation for your colleagues or manager, while also helping you stand out from the card and cookie-wielding pack. 1. Personalized Beer Growler Whether they are using it for [...]

  • viceroy-los-cabos-review

    Winter Hotel Guide: Where The Stars Stay in Los Angeles, New York and Beyond

    Whether for a business meeting, a private event, or an intimate celebration for family and friends, these are the hotels that Hollywood keeps on its list. From storied properties that are rich in film and fashion lore, to new players on the hospitality scene, here’s where to book your next stay. 1. Hotel Shangri-La (Santa [...]

  • best tech gifts ipad apple

    Retail Analysts Reveal Top Tech Gifts of 2018

    It’s shaping up to be a busy holiday season for tech and electronics companies, as gaming consoles, streaming devices and televisions top the list of most anticipated gifts, according to retail analysts. New data from Adobe Analytics forecasts that the holiday shopping season (the period from November 1 to December 31) will see more than [...]

  • best harry potter gifts art

    Harry Potter 20th Anniversary: The Best Gifts For Harry Potter Fans

    2018 marked a big milestone for “Harry Potter,” as the franchise celebrated the 20th anniversary of “Harry Potter and the Sorcerer’s Stone” release in the U.S. Since that first book was summoned onto store shelves, the Wizarding World has become a phenomenon not just in America, but around the world, spawning a successful film franchise, [...]

More From Our Brands

Access exclusive content