Thread: Interesting media activity. Deal is apparently for $80 million, including debt, stock, and Redstone's collection of old Marilyn Monroe movies! Let the bidding begin! M2
Viacom, CBS In Merger Talks - Reports
NEW YORK (Reuters) - Viacom Inc. (NYSE:VIA - news), home of Paramount Pictures and MTV, could announce a merger
as early as Tuesday with broadcaster CBS Corp. (NYSE:CBS - news), the number one-rated U.S. television network, Daily
Variety reported in its Tuesday edition.
The Hollywood trade paper said executives from both companies spent the weekend hammering out details of a deal that calls
for Viacom to buy CBS, most likely for stock. An announcement could come as early as Tuesday, the paper added.
In a separate report, the Wall Street Journal in Tuesday's online edition said such a tie-up would represent the biggest media
merger to date, creating a powerhouse with properties including the CBS network and several major cable networks.
Company officials were not immediately available for comment early Tuesday.
CBS has a market valuation of about $37 billion at Friday's closing stock price of $48.9375, according to one analyst estimate,
the Journal said. Viacom has a market capitalization of about $31 billion with its class A shares having closed Friday at
$45.3125, the Journal said.
The deal, which has been the object of speculation in the investment community and news media, raises doubts about the future
of Viacom's struggling UPN television network, since recently relaxed federal regulations still prohibit one company from
owning two networks, Daily Variety said.
But Daily Variety quoted sources as saying the deal could be derailed by Viacom Chairman Sumner Redstone and CBS Chief
Executive Mel Karmazin, since neither would want to cede power to the other.
Billionaire Redstone, 76, would probably keep voting control of the new entity via his National Amusements family company,
while Karmazin, 55, would be his heir apparent, it said.
The Journal, meanwhile, speculated that the new entity would likely be run by Karmazin.
Daily Variety said a sale would probably not put much, if any, premium on CBS' share price, which has rallied in recent days
on merger speculation.
Markets were closed Monday for the Labour Day holiday. Both issues trade on the New York Stock Exchange.
Talks between Viacom and CBS started weeks ago as a simple station deal, triggered by an August 5 vote by the Federal
Communications Commission to relax some restrictions on station ownership, Daily Variety said.
CBS owns 15 stations and Viacom 19, with the two groups overlapping in five markets.
Citing a ''a person familiar'' with Karmazin's thinking, the Journal said Karmazin believed he could sharply boost the
profitability of Viacom's TV stations if he were put in charge of the merged company. But the Journal also said Karmazin ''will
likely bring his hard-nosed brand of management to it.''
In addition to Paramount, MTV -- and its sister cable channels VH1, Showtime and Nickelodeon -- Viacom owns the Simon
& Schuster publishing house. CBS' interests include the Nashville Network and Country Music Television cable channels, as
well as a huge radio station and outdoor advertising group through Karmazin's original company, Infinity Broadcasting, which
CBS spun off into a separate, publicly traded company late last year.
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