Report: Viacom-CBS Merger Prospects Grow

Shari Redstone has taken control at Viacom Inc. after vanquishing challengers. Now, reports Bloomberg, comes the hard part: deciding what to do with all that power.

The daughter of 93-year-old billionaire Sumner Redstone, whose frail health ignited the power struggle in which she triumphed, is considering recombining Viacom with CBS Corp., according to people familiar with the matter. Such a move would reunite the two pillars of the Redstone family’s media empire, though CBS shareholders may blanch at the idea of taking on Viacom’s struggling cable networks and movie studio.

Shari Redstone

CBS, whose Chief Executive Officer Leslie Moonves has been on good terms with the Redstones, hasn’t received any indication that a deal is imminent, according to a person familiar with the matter; its board would need to support any transaction. CBS declined to comment and Shari, who serves as vice chair of both companies, didn’t respond to a request for comment. A CBS merger is just one of many decisions the Redstones will consider, including how to boost the ratings of Viacom networks and whether its creative leaders are the right ones.

Les Moonves

CBS and Viacom split in 2006 in a deal that was supposed to let the high-flying cable networks operate unencumbered by the slow, steady broadcast business.

But industry upheaval and strategic missteps have led to falling ratings for some of Viacom’s most important cable channels, such as MTV and Comedy Central, while its film unit, Paramount Pictures, has been mired in last place among the major studios, with bombs such as this year’s “Whiskey Tango Foxtrot,” “Zoolander 2” and “Ben-Hur.”

CBS, under Moonves, has been the most-watched broadcast network 13 of the last 14 years, and its Showtime cable channel has also drawn more viewers with hits such as “Homeland.” Now it is CBS that could be dragged down by Viacom’s slower growth, with more viewers shutting off cable altogether in favor of streaming video such as Netflix and YouTube.

Viacom would give CBS a broader portfolio of networks and give Moonves a rare opportunity to own a major Hollywood studio, which could make it easier to create and acquire programming. All of CBS’s major broadcast rivals -- ABC, NBC and Fox -- are part of corporations that include top film studios.

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