CBS And Viacom Set Merged Management Structure To Play To “Strongest Strengths”

Dade Hayes and Dominic Patten

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CBS and Viacom appear to have settled the question of who will run the combined entity when the Great Reunion finally occurs, perhaps as soon as next Thursday.

Bob Bakish, currently CEO of Viacom, is in line to head the merged company, sources familiar with the proposed structure tell Deadline. Joe Ianniello, who has been acting CEO of CBS, will continue to run the CBS assets in a senior role.

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Sources close the situation tell Deadline that the new planned management structure — which moves away from previous designs providing for a clear No. 2 executive — is an effort to “draw from our strongest strengths.” Bakish has spent two decades at Viacom and has effected a turnaround since taking over as CEO in late 2016. Ianniello, in a similarly long stint at CBS, has engineered a number of key deals on the retransmission and distribution fronts, and has earned high marks for stabilizing the company during and after the exit of former CEO Les Moonves.

Christina Spade, who was appointed CFO of CBS last year amid a widespread post-Moonves restructuring, is set to take on the same role for the new entity. Wade Davis, who has been Viacom CFO, is under consideration for a broader operational role in the new company given his stewardship of certain initiatives beyond finance such as Pluto TV and advanced advertising. If a position that situates him beyond finance cannot be agreed to, sources tell Deadline, Davis could exit the company.

The timing of a merger announcement remains less than certain. Still, the deal finally seems to be coming down the home stretch after years of back and forth between the companies, which operated under a single corporate roof from 2000 to 2006. Two formal rounds of merger talks had been held over the past few years once it became clear that the decision by Sumner Redstone, the 96-year-old chairman emeritus of the companies, to split them apart had not been a success. Viacom at the time was the higher-flying of the two, printing money from carriage fees and advertising with streaming still years from wreaking havoc. CBS was seen as the laggard, with legacy broadcast assets making it less enticing to investors. Over time, the roles reversed and the sum of the parts often seemed less than the whole.

CBS, Viacom and National Amusements all declined comment on the latest merger outlook.

Both CBS and Viacom are scheduled to report quarterly earnings next Thursday. The boards of the companies have circled that date as when they could formalize a deal. Still, key details such as the exchange ratio — how many shares of CBS and Viacom will be traded to create the new entity — have not been locked down. If parties are unable to finalize the new blueprint, the companies will report their earnings as scheduled and speak to Wall Street analysts on the regular quarterly call. If a deal is formalized, a merger conference call would likely take the place of the usual quarterly call.

The projected installation of Bakish in the top spot comes just a year after former CBS boss Les Moonves went to legal war with Shari Redstone, head of CBS and Viacom controlling shareholder National Amusements. One of his gripes was Redstone’s insistence on giving a key role to Bakish, a longtime Viacom executive who succeeded Philippe Dauman as CEO in late 2016. Moonves, who was ousted last fall after multiple allegations of sexual misconduct by a dozen women, always insisted on Ianniello as his lieutenant and balked at Bakish taking priority.

In addition to Davis, the management plan for several business units is still coming into focus. A different corporate source tells Deadline that “it isn’t August 8 we’re concerned about; it’s Aug. 9,” when the two companies could effectively become one and the chemistry experiment begins.

Analysts have estimated the combined entity could realize about $500 million in costs synergies. Areas that are apt to see the most cuts will be in the administrative and back-office areas of the businesses, given that the day-to-day operations of the two companies are largely complementary.

Viacom stock spiked in the final minutes of Friday trading as the news began to hit the wires. Shares finished at $34.59, up a fraction. CBS stock finished the week at $50.40, down a fraction. According to recent prices, Viacom has a market value of $12.4 billion. CBS is worth $18.9 billion. Even together, they will still be a fraction of the size of Disney or certainly media parents like AT&T or Comcast, leading many investors to speculate that further dealmaking is a certainty.

The Wall Street Journal had the first report on the management plan.

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