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CBS-Viacom Watch: Viacom Awaits New Offer, Moonves Severance Package Calculated

The temperature in the battle over the future of CBS and Viacom dropped a few degrees on Thursday after Wednesday’s flare-ups.

Viacom is awaiting a response from CBS to the acquisition counteroffer that Viacom submitted last week. CBS executives and bankers were said to be huddling Wednesday and Thursday to hammer out a new offer. Details are still sketchy but it’s believed that CBS will raise the valuation of Viacom up from its opening March 30 offer, which came in around $12 billion, a touch below Viacom’s market cap as it stood on that day. Viacom’s counteroffer sought a higher stock-swap ratio that would add nearly $3 billion to its valuation.

CBS is not expected to budge on the issue of keeping CBS chairman-CEO Leslie Moonves’ current top executive team intact. CBS envisions the combined company as being led by Moonves and with Joe Ianniello (currently COO of CBS) as president and COO. Viacom has pushed for its CEO, Bob Bakish, to be No. 2 at the combined company under Moonves. It’s unclear if there has been any back-channel effort to finding a third way around the management issue, which appears to be the biggest impediment to reaching an agreement.

Meanwhile, speculation about the prospect of Moonves being forced out by CBS and Viacom controlling shareholder Shari Redstone if a deal can’t be reached continues to hang heavy over the process. Observers of the corporate drama got out their calculators to determine the size of the massive severance package that the longtime CBS leader would receive if he leaves before his contract expires in mid-2021.

Bloomberg put the value of Moonves’ parachute at $187 million. The financial news org tackled the hard math of calculating the value of various stock awards, grants and options Moonves has collected over his 23 years at CBS, plus his contractually guaranteed bonuses, lump-sum payouts and other perks. Moonves’ haul could go as high as $280 million depending on the performance of CBS stock during the next few years.

Moonves’ high annual salary and severance deal and could become a big point of contention if Redstone opts to use her voting power to replace members of CBS’ board of directors if that board does not find a path to a deal. At the same time, such a move would invite criticism and shareholder lawsuits against Redstone under the rationale that she would be replacing directors who disagreed with her desire to recombine CBS and Viacom, and that the loss of Moonves would hurt CBS’ overall value in the short term.

CBS shares were down nearly 2% at the close of trading Thursday to $50.06. Viacom shares rose one cent to close at $30.52. CBS shares are down 15% for the year to date amid investor jitters about the health of the traditional media sector overall and concerns about the impact of a CBS-Viacom reunion. Viacom shares are down about 1% for the year to date.

Reps for CBS and Viacom declined to comment.

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