CBS, Viacom Reach Tentative Deal on Team to Lead a Combined Company -- Update
August 02 2019 - 6:46PM
Dow Jones News
By Benjamin Mullin and Cara Lombardo
CBS Corp. and Viacom Inc. have reached a working agreement on
the management team that will lead the combined company in the
event of a merger, people familiar with the matter said, resolving
a critical question that threatened to stand in the way of a
deal.
Bob Bakish, the chief executive of Viacom, will be CEO of the
combined company, the people said. Joe Ianniello, the acting chief
executive of CBS, will be offered a job overseeing all of
CBS-branded assets at the combined company under the working
agreement, they said.
Mr. Ianniello is well regarded by Wall Street and has been an
advocate for CBS's direct-to-consumer streaming platforms, as well
as playing a key role in driving up the distribution fees the
company receives from cable and satellite operators. In addition,
he has calmed the waters at CBS after the abrupt departure of
longtime CEO Leslie Moonves, who was forced to step down in
September after several women accused him of sexual harassment and
assault.
The working agreement also calls for Christina Spade, the chief
financial officer of CBS, to become chief financial officer of the
combined company, they said.
CBS hasn't yet submitted a formal offer for Viacom, and
negotiations are still fluid, some of the people said. The timing
of the deal is still uncertain, but both companies are making
progress, they said.
A deal could be announced before the end of the month, according
to people familiar with the matter. Among the outstanding issues
are the exchange ratio for the two companies and the composition of
the board.
Mr. Bakish has long been considered the most likely candidate to
helm the combined company, people familiar with the situation have
said. He and Shari Redstone, whose family's holding company
National Amusements Inc. controls both Viacom and CBS, have a good
working relationship.
The working agreement for the management structure casts aside
one of the biggest roadblocks that could have impeded a deal
between the two sister companies. Ms. Redstone, who is vice
chairman of both CBS and Viacom, believes the companies would be
better positioned to compete with larger rivals as a merged
entity.
Viacom has been the weaker of the two companies over the past
several years, having suffered as cable-TV cord-cutting contributed
to a decline in ratings for its major networks. A merger with CBS
would give it greater scale and more leverage in negotiations with
advertisers and cable-TV providers. CBS, which has been propelled
by sports and some broadcast-TV hits, could stand to benefit from
cable networks owned by Viacom that reach younger audiences, such
as Nickelodeon and MTV.
This marks the third time in four years that directors at CBS
and Viacom have explored a merger. The first attempt, in late 2016,
was called off due to a lack of enthusiasm on the part of both
companies. The second attempt, in 2018, culminated in a shareholder
lawsuit filed by CBS against Ms. Redstone, her father Sumner
Redstone and National Amusements, accusing them of breaching their
fiduciary duties. It concluded in a settlement that stipulated
National Amusements wouldn't propose a merger for roughly two
years.
That doesn't preclude the possibility of a merger: The two
companies can merge if two-thirds of the board members at CBS not
affiliated with National Amusements vote for it.
It is unclear whether Viacom Chief Financial Officer Wade Davis
will remain at the combined company, given that the working
agreement calls for there to be no chief operating officer
role.
Mr. Davis is involved in setting Viacom's ad-sales strategy, and
his portfolio includes Viacom's finances, corporate strategy,
technology operations and the recently acquired direct-to-consumer
video-streaming service Pluto TV.
The management structure under consideration would be a
departure from the way both Viacom and CBS have been organized in
the past, when the second-in-command has held the role of chief
operating officer. Viacom's former chief operating officer, Thomas
Dooley, served in that position from 2010 until 2016, when he was
named interim CEO; he left later that year. Viacom doesn't
currently have a chief operating officer.
Mr. Moonves ran CBS with a second-in-command, Mr. Ianniello, who
was then chief operating officer. Mr. Ianniello became acting CEO
in September after Mr. Moonves was forced to step down over
sexual-harassment and assault accusations. Mr. Moonves has denied
accusations of nonconsensual sexual relations.
The proposed structure doesn't preclude the possibility that Mr.
Bakish will appoint an executive overseeing strategy after the
merger is announced. Mr. Ianniello is eligible for a $70 million
payout if he isn't named permanent CEO of CBS, according to his
contract.
--Emily Glazer contributed to this article.
Write to Benjamin Mullin at Benjamin.Mullin@wsj.com and Cara
Lombardo at cara.lombardo@wsj.com
(END) Dow Jones Newswires
August 02, 2019 18:31 ET (22:31 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
CBS (NYSE:CBS)
Historical Stock Chart
From Aug 2024 to Sep 2024
CBS (NYSE:CBS)
Historical Stock Chart
From Sep 2023 to Sep 2024