Merger of CBS, Viacom Not Guaranteed, Says Shari Redstone

Brian Steinberg

Investors eagerly anticipating a new merger of CBS and Viacom ought to take a pause. A recombination of the two colorful media conglomerates is not a foregone conclusion, according to one of the controlling shareholders of both companies.

“Everything is possible,” said Shari E. Redstone, the vice chairman of both CBS and Viacom, who controls both firms along with her father, Summer Redstone, through her family’s movie-exhibition firm, National Anusements Inc. “The right thing will happen at the end of the day,” she said, speaking at a conference organized by The New York Times’ “DealBook.”

In September, National Amusements sent a letter asking both companies to explore the idea of a merger.  Viacom and CBS were joined together in 2000, only to be split apart in 2006.

Shari Redstone said Thursday that independent committees had been set up at both CBS and Viacom to explore whether a new merger would be in the best interests of both companies’ shareholders, and noted that she was not involved in the deliberations of either corporation, citing legal reasons.

She did, however, make a case for the two to return to the altar. Scale, or the ability to reach audiences across a variety of media venues, has become more important to both consumers and advertisers, she said, and would help both CBS and Viacom gain new leverage in an industry that is consolidating among fewer players – and one in which distribution companies are quickly snapping up content.

Indeed, Redstone hinted that she was not in favor of the decision to break up the companies approximately a decade ago. She also suggested she might have supported a potential tie-up between CBS and Time Warner, a prospect rumored to have been discussed in the recent past.

“I’m a supporter of anything that will allow us to expand our portfolio of great brands,” she said.

Even so, Redstone added, CBS and Viacom don’t have to rush into each other’s arms. “If that doesn’t happen, these companies can stand on their own and they can be great,” she said.

In remarks made to investors last week, CBS Corp. CEO Leslie Moonves said the company’s discussions about a potential merger with Viacom remained in “early stages..” Viacom executives said Wednesday that they were also exploring the prospect of a merger but focusing equally on operating as an independent company.

The explorations take place as Viacom’s financials have shown signs of strain. Ratings and viewership have dipped at certain flagship operations, including MTV, and the company’s Paramount studio has suffered from a lackluster spate of films.

Redstone signaled she was against a sale of the movie studio, noting it would be an important asset in the future, and could be used to make content for the movie screen as well as others, such as those found on mobile devices. “I think it’s important to have a studio and see how it evolves over time,” she said.

Tracking emerging consumer media habits has occupied much of her time she said, both at Viacom and her own investment firm, Advancit Capital. She believes consumers have grown more interest not only in content for mobile devices, but also programming that is interactive and allows them to have a role in how storylines develop. They are less interested in being spectators and want to have more of an active role, she added, noting the rise of so-called “e-sports.”

“I want to know where they are headed,” she said. “What are they doing next, and how can I get there ahead of them?”

Redstone said she shared the same goals as her father, Summer, and that after a hard year during which they worked to shake up Viacom management, were now moving forward.  “The battles are over,” she noted. “My dad and I are working very hard to maximize value.”




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