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CBS and Viacom Are Said to Be Close to Agreeing on a Price for Their Merger

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Signage is displayed at the CBS Corp. Television City studio complex in Los Angeles, California on Aug. 7, 2019. Patrick T. Fallon—Bloomberg via Getty Images

The boards of CBS Corp. and Viacom Inc. are close to agreeing on a price for their long-awaited merger, after negotiating late into the night Sunday, according to people familiar with the matter.

The exchange ratio for the all-stock deal being discussed is between 0.595 and 0.6 but could still move around, according to some of the people. At this level, a deal would value Viacom at around its market value.

The current trading ratio between the two companies is 0.588 based on their stock prices on Monday in New York. The Wall Street Journal first reported the ratio numbers.

The companies were aiming to finalize this ratio and announce a merger by Monday, although the timing could slip into Tuesday, said the people, who asked not to be identified because the matter was private.

The last time the companies were in merger discussions, more than a year ago, Viacom directors had agreed to take 0.6135 CBS share for every nonvoting share of their business, people with knowledge said at the time.

The companies now expect about $500 million of annual cost synergies from the deal after Viacom took about $300 million in costs out of its business, one of the people said.

Shari Redstone, whose family investment vehicle National Amusements Inc. controls both companies, would become chairman of the combined entity, the people said. Viacom Chief Executive Officer Bob Bakish, meanwhile, is set to lead the company as CEO, the people said. He would also get a seat on the board.

The deal would unite the most-watched U.S. broadcast network with the owner of the Paramount movie studio and cable channels such as MTV and Nickelodeon. It would also cap years of failed merger attempts and board infighting at both companies.

Greater Scale

The companies are likely to highlight how greater scale will help them negotiate with third parties, Moffett Nathanson analysts said in a note to clients on Friday. “CBS’s and Paramount’s production asset will quickly move up the ranks to challenge the big boys of Disney, Comcast, AT&T and Netflix and will be an attractive home for creative talent,” the said.

CBS would receive six seats on the 13-member board, while Viacom would get four, the people said. Another two would be designated to NAI, they said, with Redstone and family attorney Robert Klieger slated for those roles.

Strauss Zelnick, the video game executive who is the interim CBS chairman, has stated that he’s not interested in an ongoing role. The Information reported on the likely board composition last week.

Viacom had a market value of about $12 billion as of Friday’s close.

The companies, using the codenames “Comet” and “Venus,” had earlier expected to save at least $1 billion by combining.

CBS and Viacom, both based in New York, were one entity until 2006, when the Redstone family decided investors would give them greater value as separate companies. That strategy didn’t work as well as expected, and there’s been on-and-off-again efforts to recombine them in recent years.

CBS has been weighing its next moves since the ouster of longtime CEO Les Moonves last year. He was fired in September after a dozen women accused him of sexual misconduct, setting off a shake-up that included a board overhaul. Joe Ianniello, formerly chief operating officer, has been running the company as interim CEO ever since.(Updates with details on share ratio, analyst comments in fifth paragraph.)

--With assistance from Jeff Green and Gerry Smith.