The saga of Viacom (NASDAQ: VIA) (NASDAQ: VIAB) and CBS (NYSE: CBS) — a complicated tale that sometimes seems worthy of being its own premium cable drama — has taken another surprising turn.
It’s a tale that has already seen court hearings led by a jilted lover trying to prove that her billionaire ex — Sumner Redstone — was no longer competent, as well as power plays, two CEO departures, and plenty of family intrigue.
Sumner Redstone is the majority shareholder in both CBS and Viacom, which had been considering merging (after splitting in 2006) at the urging of Sumner and his daughter Shari Redstone. The Redstone family controls National Amusements, which in turn holds 80% of the voting stock in CBS and Viacom. And now that company has reversed its message and come out against the re-merger.
What has changed?
After months of pushing the merger, the Redstone family seems content with letting Viacom stay independent. That seems largely due to the presence of new CEO Bob Bakish.
“Over the past few months, after careful assessment and meetings with the leadership of both companies, we have concluded that this is not the right time to merge the companies,” a message sent by National Amusements to the CBS and Viacom boards said. “Following the management changes that the Viacom Board put in place, we have been very impressed with the forward-looking thinking and strategic plan being pursued under Bob Bakish’s leadership.”
It’s possible the change was also impacted by CBS CEO Les Moonves’ reservations about the deal.
What happens next?
When two people (Shari and Sumner Redstone) control 80% of two companies and one of those people is in questionable health, there is always going to be drama. In this case, with a new presidential administration coming in, and general uncertainty in the market, doing nothing may make the most sense.
The Redstones can give Bakish time. He deserves a chance to try to lead the company without the threat of losing his job in a merger. If that doesn’t work out or if the market climate changes, it will be easy enough to revisit this topic and, if it looks beneficial, put the two companies back together. Don’t expect this to be the end of the drama. It’s more like a mid-season break — a pause in the action that leaves us waiting to see what happens next.
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Daniel Kline has no position in any stocks mentioned.
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