NEW DELHI: The maverick Sumner Redstone, not letting age dim any of his business acumen, is at it again. Earlier this week he sent a strong message to investors and potential takeover tycoons that he favours a merger of American media companies CBS Corp and Viacom Inc.
Redstone-family controlled National Amusements, the company that owns 80 per cent of voting shares in CBS Corp and Viacom Inc, on Thursday proposed a merger of the two entities saying it would not support the acquisition of either media company by a third party or surrender its control of either firm.
National Amusements in a letter to both companies' boards conveyed that a merger would "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," a Reuters report, based on information from Bengaluru and New York centres, said, adding both companies acknowledged receipt of the letter.
Redstone had split CBS from Viacom 10 years ago as investors saw CBS as a slow-moving company catering to an older audience, while Viacom, whose networks include Nickelodeon and MTV, was considered more youthful. But CBS shares have outperformed those of Viacom over the last five years.
According to the Reuters report, Shari Redstone, Sumner’s daughter and an owner of National Amusements, has favoured recombining CBS and Viacom under the leadership of CBS Chief Executive Officer Leslie Moonves.
But for a deal to happen, the Redstones will have to assure Moonves he will have full autonomy over the combined entity, Reuters said basing their observations on unnamed sources.
Industry speculation that the two companies might come together again increased in recent weeks after the Redstones prevailed over a power struggle that resulted in the departure of Viacom Chief Executive Officer Philippe Dauman.
CBS's management and independent directors "will take appropriate actions to evaluate what is in the best interest of the company and its shareholders," a representative told Reuters. Viacom said it expected its board to form a special committee of independent directors to consider this offer.
In its letter, National Amusements said the optimal deal would be an all-stock transaction giving holders of each company shares in the combined entity of the same class they currently own.
Any transaction would require the approval of both boards. Sumner and Shari Redstone will not vote on the deal as directors of Viacom and CBS or participate in deliberations, according to the letter. David Andelman, a CBS director, also will not participate in the process, the Reuters report stated.
It is within National Amusements' rights to refuse considering any other acquisition of either company, two lawyers familiar with the matter said on Thursday.
In India, Viacom Inc has a joint venture with Mukesh Ambani-controlled Network18 group christened Viacom18 that oversees TV channels like MTV, Nick and Hindi language entertainment channel Colors.
