August 17, 2018

Common Sense: A Battle for Control of CBS, With Far-Reaching Consequences

“From CBS’s perspective, you’ve got to be pretty happy with your business,” said Doug Creutz, senior media and entertainment analyst for Cowen Co. “Why would you want to complicate it?”

For its part, Viacom, after years of turmoil, seems to have stabilized under the leadership of its new chief executive, Robert M. Bakish, who has emerged as a favorite of Ms. Redstone’s. (Ms. Redstone has pushed to have him play a meaningful role in the merged companies, either as a high-level executive or as a board member.) But so far this year, Viacom’s Paramount movie studio accounted for less than 6 percent of the domestic box office. Disney, the market leader, had over 34 percent.

Still, people at CBS told me that while they wouldn’t mind gaining control of the Paramount studio, they have little or no interest in Viacom’s traditional cable networks, including MTV, VH1 and Comedy Central. Those are suffering acutely from the cord cutting that is afflicting the entire cable industry. (Mr. Creutz, the analyst, described Viacom’s cable assets as a “melting ice cube.”)

Given the level of acrimony that has erupted this week from CBS’s move — National Amusements said it was “outraged” and Ms. Redstone was described as “shocked, disappointed and upset” — it’s hard to imagine any amicable settlement. That leaves two potential outcomes: If Ms. Redstone prevails, Mr. Moonves and his team would be out, marking the end of an era at CBS. It would presumably fall to the relatively untested Mr. Bakish to merge the two companies and soldier on at a perilous time for cable and broadcasting operations.

If CBS wins, and Ms. Redstone’s control is diluted, the Redstone era will come to an end, and with it the likelihood that either CBS or Viacom will last long as independent companies. Viacom is so small and weak that it would need a rescuer, probably at a lower price than CBS was being asked to pay. And CBS would be free to pursue a merger with someone like Verizon, or go it alone.

Article source: https://www.nytimes.com/2018/05/16/business/cbs-viacom-battle-redstone.html?partner=rss&emc=rss

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