CBS, Viacom Gain on Speculation That Merger Deal May Be Nearer
(Bloomberg) -- Shares of CBS Corp. and Viacom Inc. surged Friday on speculation that a long-awaited merger between the two companies may finally be close.
CBS Chief Executive Officer Leslie Moonves helped kick off the rally with stronger-than-expected results, signaling that his management team should stay in control in the event of a Viacom deal. The upswing gained additional momentum on Friday afternoon, when Reuters reported that CBS Vice Chairman Shari Redstone is willing to make a key concession in order to help get the transaction done.
The two companies have been locked in an unusual tussle. The Redstone family controls both businesses, and they were one corporation before a breakup more than a decade ago. But getting them back together has proved challenging. Shari Redstone has indicated before that she wants Viacom CEO Bob Bakish to become the new company’s second-in-command. Moonves would prefer to keep his own people in charge.
But Redstone has now offered to drop the demand that Bakish become the No. 2 executive at the merged business, as long as he sits on the board, Reuters reported. That could set up CBS Chief Operating Officer Joseph Ianniello to eventually succeed the 68-year-old Moonves as CEO. Still, Redstone continues to want Bakish to ultimately ascend to the CEO job, the news agency said.
The takeover talk helped send CBS on its biggest surge in more than five years, with the stock gaining 9.2 percent to $53.22. Viacom rose 7.1 percent to $31.45, its largest intraday jump since February.
Boards of the companies have been discussing a merger for a couple months but reached an impasse over the management issue.
CBS didn’t directly address the merger talks in its earnings report. Still, Moonves pointed to the results as further evidence that the company has the right strategy. After the media giant’s online efforts helped offset declining viewership at its broadcast network, first-quarter earnings and sales both sailed past analysts’ estimates.
“In an era where others are concerned about losing subscribers caused by cord cutting and other matters, CBS is growing its subscribers,” Moonves said on a call with analysts.
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