Report: Time For Serious Talk For CBS, Viacom

CBS and Viacom are expected to begin seriously discussing a merger next week, culminating months of speculation about an eventual combination, according to CNBC citing  people familiar with the matter.

CBS is holding a meeting of board members tomorrow, and though no formal announcements are planned, the board of directors is expected to decide to increase the level of seriousness around discussions with Viacom, said the people, who asked not to be named because the discussions are private.

CBS and Viacom know each other well, which could speed along discussions over the next few weeks about an exchange ratio, board composition and management leadership positions.

Still, there are still unknowns that could bog down the talks.

Bob Bakish, the Viacom CEO, is expected to be the head of a combined company, said the people. In a typical deal, the combined company would pick a CEO then let that person fill out the rest of the management team. But here, there are several reasons why the combined company would appoint and name several other top execs at the same time as picking a CEO.

First, the CBS board lacks confidence in Bakish’s team, given their dearth of experience running a broadcast network and a premium movie channel, said two of the people.

The CBS board particularly wants David Nevins, who was named CBS’s new chief creative officer in 2018, to get a high-profile job in the new regime, said the people.

While current CEO Joe Ianniello is well-liked at CBS, his ties to former CEO Les Moonves may hurt his chances to stay at a combined company, the people said. Ianniello was first Moonves’s chief financial officer and later chief operating officer.

Further, the CBS board is bracing for a possible shareholder lawsuit if a deal is consummated. Some members of the board are worried that paying a premium for Viacom and taking its CEO will be seen as overpaying for an under-performing company, one of the people said. Viacom shares are down about 58 percent over the past five years.

Taking Viacom execs along with Bakish could strengthen any such lawsuit -- the reasoning being that CBS should not take the management team of a company that has long under-performed. So CBS executives could win out over their Viacom equivalents for jobs underneath Bakish, the people said.