Viacom and CBS hire investment bankers, start merger process


Just days after their mutual joint shareholder asked them to merge, CBS Corp. and Viacom have both hired investment bankers and legal consultants to help them explore the process.

According to the Wall Street Journal, Viacom has enlisted Morgan Stanley to explore the potential re-combination of the two media companies, which broke apart a decade ago.

The paper also said that CBS has retained Mortan Pierce of White & Case as legal counsel to look into the matter. None of the parties have commented at this point. 

The moves follow the merger recommendation last week by the Sumner Redstone-controlled National Amusements, which owns 80 percent of the voting shares for both companies. 

“…A combination of CBS and Viacom might offer substantial synergies that would allow the combined company to respond even more aggressively and effectively to the challenges of the changing entertainment and media landscape,” National Amusements said in a letter. 

Combined, the two companies have a market capitalization of around $40 billion. The advisor hirings also come a few weeks after both companies set up special committees to look into the merger. 

In August, MoffettNathanson analyst Michael Nathanson called the original separation of the companies a “major mistake” for National Amusements.

“It was an illogical idea that was made worse by poor execution and the changing dynamics of the media ecosystem,” wrote Nathanson in a blog post. “The right fix for National Amusements is to combine Viacom and CBS in stock-for-stock merger which creates massive cost synergies and puts a real programmer in charge of the business. However, CBS management has long dismissed the value this brings to their strategy and will need to be re-incentivized to do this.”

He called on the companies to merge back together and divest struggling Paramount Pictures, which has controlled only 7 percent of domestic box office revenue this year. 

For more:
- read this Wall Street Journal story

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