Report: Les Moonves 'Skeptical' Of Viacom, CBS Corp. Merger

Coming a decade after Sumner Redstone split the two companies from each other, the proposed reunion  of Viacom and CBS Corporation would be effectively an admission that the 10-year-old divorce, which was originally intended to free Viacom’s then fast-growing cable channels from the drag of CBS’s old-school broadcast assets, didn’t pan out as intended.

Shari Redstone

The Wall Street Jounral reportsViacom’s 26 U.S. cable networks—many of which are small or have had significant viewership declines—now look vulnerable in an era when consumers are cutting the pay-TV cord and signing up for slimmed-down bundles of cable channels. CBS, meanwhile, has been a prime-time ratings juggernaut and has boosted its position in the market by carrying big sports events like professional football and college basketball.

Viacom has been struggling with underperforming assets like its Paramount Pictures studio and cable channels MTV and Comedy Central, which has led to a slide in its stock price. The company has $12 billion in debt and has been under pressure to improve its operating performance. Moody’s Investors Service recently downgraded its credit rating to the lowest level of investment grade.

A merger could provide a strong leader for Viacom in the form of CBS CEO Leslie Moonves, a favorite of media investors.

Les Moonves

Ms. Redstone broached the topic of a Viacom-CBS merger with Mr. Moonves several months ago, a person familiar with the matter said. However, there have been no serious talks since then or since Mr. Dauman agreed in August to step down as Viacom’s chairman and CEO.

CBS said Wednesday that, “As we’ve said before, the CBS Corp. will always act in the best interest of all of its shareholders.”

Mr. Moonves has previously expressed skepticism about a merger of the companies, and he said at a recent investor conference that there were no active talks between CBS and Viacom.

People close to Viacom and CBS think Mr. Moonves won’t be sold on a deal unless CBS is valued at a premium to Viacom and he has the same level of autonomy he currently enjoys at CBS. His contract allows him to leave if the composition of the board changes.

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