As media moguls were huddled in Sun Valley this week at the 36th annual Allen & Co media conference, the biggest pending media deal being talked about in the press wasn’t coming from Idaho.
“While the resort town of Sun Valley is abuzz with anticipation of potential mergers, Shari Redstone is keeping a tight lid on the deal she has been pushing for years: The merger of CBS and Viacom – both controlled by her father’s holding company, National Amusements Inc,” wrote Charlie Gasparino and Lydia Moynihan this week for Fox Business.
When asked, in Sun Valley, about the possibility of a CBS/Viacom merger, Redstone responded, “I never talk,” according to the article.
However, the story adds, “[A]s Shari is hobnobbing with the moguls in Sun Valley, the new CBS acting chief Joe Ianniello and Viacom CEO Robert Bakish are actively engaged in merger negotiations back in New York, Fox Business has learned.”
The article then notes, “No announcements are expected this week on the deal, but the progress in the talks is said to be real: Management is engaged in discussions on deal price and the management structure of the new company.”
Over at Deadline, editor-at-large Peter Bart, also wrote this week about the talks to reunite Viacom and CBS, noting, “a deal that will likely trigger a new cycle of corporate mega-deals, perhaps reshaping the landscape of the media industry.”
Bart’s primary focus in his piece is the “ghost” overseeing the deal. Bart says that’s Shari’s father, “Sumner Redstone, age 97, the master dealmaker responsible for creating the teetering corporate edifice. His presence still hovers over the company, but his mental health is the subject of litigation, as is his potential influence over the deal.”
Bart adds, “Given his addiction to corporate intrigue, Redstone himself would doubtless yearn to inhabit a seat at the table. Instead he is confined to bed in his sprawling contemporary mansion that sits atop Beverly Hills, unable to talk or walk. Buried in his brain is the knowledge that he still could ignite what one attorney describes as “bombshells” buried in trust documents, possibly scuttling dealmaking prospects. Bankers cannot recall a parallel corporate drama in which a patriarch, while still alive, was rendered mute over key merger decisions.
“When I visited with Redstone three months ago, his withered hand signaled a greeting, or the semblance of one. His eyes flickered weakly, but his effort at conversation was reduced to a grunt, mixed with an occasional scream of rage and frustration over his limitations. His fingers could peck out limited responses – a “yes” or “no” – on a specially rigged computer.”
Here’s Bart’s conclusion in his must-read piece: “Would [Redstone] favor a merger if he were now at the table? After all, this is the third time in four years that directors have explored that objective. After the last foray, a judge elicited a pledge that the two companies could unite only if two thirds of the CBS board favored it. Both companies were in stronger shape when the earlier merger initiatives were advanced.
“Now both are in troubled waters – CBS lost a quarter of its value in 2018 and has yet to recover –and Sumner’s likely would have been the loudest voice reminding everyone of that reality.
“That is, if ghosts could talk.”
Another must-read piece on the CBS-Viacom situation is William D. Cohan’s Vanity Fair article that was posted on the magazine’s website in May.
Cohan writes, “A merger between CBS and Viacom will inevitably lead to job losses. When the two sides abandoned their last attempt at a merger a little more than a year ago, more than $1 billion in ‘cost synergies’ had been identified by the bankers and executives involved in the discussions. On Wall Street, ‘cost synergies,’ in the context of merger negotiations, is code for ‘expense cuts.’ And that’s what the rank and file at CBS (and Viacom for that matter, too) probably have not reckoned with as Shari Redstone continues to push the two companies together. ‘People inside CBS aren’t focused on this happening, even though they should be,’ says the former CBS executive. ‘A billion dollars of synergies sounds nice when it rolls off a banker’s tongue, but guess what? That means big job losses are coming in the aftermath of the merger.’”
But those kind of sobering thoughts are not usually on the minds of the deal-makers attending the Allen & Co. conference in Sun Valley.