National Amusements calls off CBS-Viacom remerger

Majority shareholder National Amusements wants CBS and Viacom to pursue independent paths.

National Amusements, the majority voting shareholder of both CBS and Viacom, has asked the companies’ boards to discontinue their discussions regarding a possible remerger of the companies.

In a letter (PDF) sent today to both boards, National Amusements CEO Shari Redstone asked both companies to instead focus on “their independent paths forward.”

“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,” wrote Redstone. “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. We know Viacom has tremendous assets that are currently undervalued, and we are confident that with this new strong management team, the value of these assets can be unleashed. At the same time, CBS continues to perform exceptionally well under Les Moonves, and we have every reason to believe that momentum will continue on a stand‐alone basis.”

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National Amusements initiated the inquiry into a possible recombination for CBS and Viacom back in September. Since then, Bakish has taken over for Viacom and asserted his mission to pursue an independent strategy for the struggling programmer.

Bakish began his tenure as Viacom chief by announcing a $345 million acquisition of Televisión Federal S.A. (Telefe), one of the main free-to-air channels in Argentina that reaches 95 percent of Argentina’s 43 million residents and attracts a 33 percent viewership share.

Bakish told The Hollywood Reporter that the Telefe deal had nothing to do with the possible CBS transaction.

"I have been chartered by the board to focus on running Viacom as a strong independent company and putting in place a strategy, which will grow the company over time. This move clearly fits with our international strategy, which is an integral component of the overall Viacom growth strategy," Bakish told the publication.

Meanwhile, CBS has kept chugging along on its own with continued growth. The broadcaster announced its third-quarter earnings, marked by quarterly revenue increasing 4% to $3.4 billion on EPS of $1.15 (up 31% annually). CBS attributed the growth to a 32% increase in retransmission revenues and fees from CBS Television Network affiliated stations as well as growth from digital distribution platforms. Meanwhile, content licensing and distribution revenues grew 6% driven by growth in domestic television licensing sales.