Shari Redstone, whose family controls CBS Corp. and Viacom Inc., wants executives from both companies to run the combined entity after a merger, according to people familiar with the matter, putting her at odds with a proposal from CBS.
Redstone won't support combining the companies without Viacom boss Bob Bakish in a top management role, said the people, who asked not to be identified discussing private information. CBS's proposal calls for CEO Les Moonves and his team to run the combined company, the people said.
CBS's proposal values Viacom below its current market price, with an offer of 0.55 of its shares for each of Viacom's class B, the people said. Viacom was seeking an opening offer that valued its operations at least at market rate, as well as a role in the management of the company. A special committee of Viacom's independent board members is working on a quick counteroffer, the people said.
Viacom, the owner of MTV, Comedy Central and Paramount Pictures, traded at $29.85 at 12:00 p.m. Wednesday in New York, giving the company a market value of $12.3 billion. CBS traded at $53.14, implying a valuation of $29.23 a share for Viacom, based on its initial offer.
Management and price loom as the biggest hurdles to a deal that would combine the two multibillion-dollar media companies.
Redstone wants to make sure the new managers can operate the combined assets effectively and generate cost savings, and believes Bakish needs to be a part of it, the people said. CBS proposed Moonves and his No. 2 Joseph Ianniello lead the new company.
RBC Capital Markets analyst Steven Cahall said the companies could save as much as $750 million by combining their businesses.
Bakish was promoted to run Viacom after a bitter dispute between Redstone and the company's previous regime. He had run Viacom's international operations, an area of growing of importance due to the weakness of the traditional U.S. TV business.
Moonves ascended to the top of CBS after a long career as a programming and studio executive. Known as one of the top "show pickers" in the TV business, he is also one of the best-compensated executives in media. Ianniello is his long-time deputy, and a familiar name to analysts and investors.
The merger talks come after a bid to recombine the companies, which split up more than 12 years ago, failed in 2016. The Redstone family investment vehicle, National Amusements Inc., controls about 80 percent of the voting stock in both companies. Shari Redstone, who has expressed concerns over governance at CBS in the past, has the power to oust management and seek new board directors.
-- Bloomberg News