The demand which incidentally underscores the wide gap between Viacom’s price expectations and CBS Corp’s offer price indicates that both companies have made little progress in talks. The synergies however have potential since it would position the combined company to better leverage its asset swhile negotiating with U.S. cable and satellite companies.
As per sources familiar with the matter at hand, Viacom Inc has directed CBS Corp to sweeten its merger bid by around $2.8 billion, which amounts to nearly a quarter more than CBS’s previous offer, thus indicating the wide gap in Viacom’s price expectations against CBS Corp’s offer.
Although National Amusements Inc, the Redstone family company that controls CBS and Viacom, has pushed Viacom and CBS Corp to negotiate a merger, Viacom’s request indicates that both companies have yet to make progress in their talks.
Last week, Viacom had asked CBS, through a letter, 0.68 CBS shares for each Viacom class B share, against CBS’ offer of 0.55 of its shares for each Viacom class B share, said sources.
CBS is now weighing its option for the next steps in the negotiations, said sources who spoke on the condition of anonymity since Viacom’s request is confidential.
Both, CBS and Viacom declined to comment.
Incidentally, Viacom’s shares have floated up since November on speculative grounds of the new merge efforts. Previous rounds of negotiations in 2016 had ended unsuccessfully.
Last week, through its letter, Viacom had asked that Robert Bakish, its CEO, to be the CEO and President of the combined company, a demand supported by National Amusements. However, CBS has asked that Joseph Ianniello be at the helm of the combined company, said sources.
A successful merger would combine CBS’ television network, local TV stations and Showtime cable network with Viacom’s cable networks, including MTV, Comedy Central and Nickelodeon, as well as Viacom’s Paramount Pictures film studio.
In recent times, the media sector has seen an increase in pressure to consolidate. AT&T Inc’s planned $85.4 billion acquisition of Time Warner Inc and Walt Disney Co’s $52.4 billion purchase of assets from Twenty-First Century Fox Inc’s are recent examples underscoring this growing trend.
If Viacom and CBS were to merge, the combined company would be in a better position to leverage prices for their combined programming with U.S. cable and satellite companies, which is facing a decline in subscribers midst fierce competition against media streaming companies, such as Netflix Inc.