Talking about Shari Redstone accelerating an effort to recombine Viacom and CBS Corp. is sowing tension within both companies.
CBS connoisseurs were horrified in a report in the Wall Street Journal on Wednesday citing Redstone's concern about the lack of long-term strategic planning in the eye and level of independence among its members.
Meanwhile, Viacom executives are again nervous about CBS's consolidation potential to carry out wholesale changes in the company's management, particularly in the cable network division. . The feeling among initiates is that things have barely begun to settle after a year of confusion in 2016, before Bob Bakish was appointed permanent CEO in December of that year.
"Here we go again," said a Viacom executive. MTV Networks.
The sources of both companies expressed surprise and frustration that the first signs of a fusion effort emerged through media reports rather than through the boardroom. A representative of Redstone declined to comment.
Redstone, vice president of Viacom and CBS, announced his desire for the companies to meet in the fall of 2016, but eventually declined after both boards responded on price issues. and governance At that time, Viacom was on the ropes after a months-long legal battle between controlling shareholder Sumner Redstone, Shari Redstone and former Viacom CEO Philippe Dauman.
CBS and Viacom were joined for the first time by Sumner Redstone in 2000. But six years later, the tycoon chose to split the companies into separate entities. At the time, Redstone said he thought it would help both companies realize their true market valuation. It is proven that Shari Redstone opposed the division in 2005.
The $ 52,400 million deal submitted last month by Disney to acquire 21st Century Fox has rapidly increased the pressure on smaller media conglomerates such as CBS Corp. and Viacom to multiply or be larger. seen as an acquisition target. The Redstones' strict control over CBS and Viacom has thwarted previous efforts for CBS Corp. President and CEO Leslie Moonves to participate in merger talks with potential partners such as Time Warner, Lionsgate and most recently, Verizon.
It is understood that Shari Redstone has insisted that Viacom be part of any merger and acquisition talks involving CBS. That is a major obstacle for suitors who might be interested in the assets of CBS broadcast and its extensive library of television programs.
The biggest drawback of Viacom is its dependence on the MTV Networks division as its profit and earnings engine. Viacom's main cables (MTV, Nickelodeon, Comedy Central) not only face the challenges of the rankings, like any other traditional television medium, but it is clear that Viacom will have to discard some of its lower profile channels in the coming years. How to put a price on those smaller channels today, given their decreasing value, was a big part of the obstacle to the merger discussions in 2016.
The coldness of the CBS top executives in an agreement with Viacom has been palpable . It is seen as a rescue effort for Viacom, which is still battling against forecasts of declining affiliate and advertising revenue for its cable networks in the coming years. Viacom is also still in the early stages of a management turnover at Paramount Pictures, which suffered a hemorrhage of red ink for the past three years.
CBS, meanwhile, has taken the boom in content licenses to a series of quarters. In March 2016, CBS presented a five-year strategic plan at a one-day investor presentation in which it cited content licenses, international expansion, retransmission consent revenues and new broadcast platforms such as CBS All Access and Showtime as pillars of your growth plan. 19659006] The Eye pledged in that presentation to deliver 8 million OTT subscribers by 2020; Last August, Moonves said that CBS All Access and Showtime's independent streaming service were more than half that goal. Retrans revenue, a large revenue driver, is projected to reach $ 2.5 billion annually by 2020.
On the international front, CBS has expanded Showtime's reach in major overseas markets for the first time in the past two years, and it has also exploded in the fire sale of Australia's Red Ten in November.
The level of detail that CBS presented in 2016 and the progress reports delivered since then were cited by several CBS sources who were outraged by the reference to the lack of long-term planning in the Journal's report, which cited the Several sources familiar with Redstone's thinking.
The campaign reported by Redstone to find replacements for some of the CBS board members also angered experts, given the prominence of independent directors such as former Bank of America President Charles Gifford, former Senator and Secretary of Defense William Cohen, former NAACP president Bruce Gordon, and Harvard Law School dean Martha Minow. CBS usually holds its annual meeting in May. It is not clear how many directors will present themselves for re-election at that time.
Sources said there is consternation within CBS over fears that the tension between Moonves and Redstone could be destabilizing in general for the company. Sources close to the situation said that until Wednesday, there have been no formal steps to start merger talks between the two together.
(Pictured: CBS Corp. President and CEO Leslie Moonves, CBS and Vice President of Viacom Shari Redstone)