Viacom Inc. and CBS Corp. will be asked by their controlling shareholder, the Redstone family, to explore a merger, according to a person familiar with the matter.
National Amusements Inc., the Redstones' holding company, is expected to send letters to both media giants as soon as this week to request their boards establish independent committees to consider a combination, said the person, who asked not to be identified discussing private information.
Shari Redstone, who has taken an active role in oversight of both companies with her 93-year-old father Sumner in frail health, has been considering a merger of CBS and Viacom to create a more powerful media empire, Bloomberg reported last month. But CBS shareholders may blanch at the idea of taking on Viacom's struggling cable networks and movie studio.
CBS CEO Les Moonves said earlier this month the company isn't in active discussions for a deal with Viacom, acknowledging the speculation that has been swirling about a merger ever since Shari Redstone emerged victorious in a battle for control of Viacom.
Reuters reported on National Amusements' plans earlier Wednesday. Viacom declined to comment, and CBS didn't immediately respond.
National Amusements owns 80% of the voting shares of both companies, which split in 2006 so CBS wouldn't hold back Viacom's anticipated rapid growth. That controlling stake makes it difficult for minority shareholders to challenge a deal if the Redstones desire it. But 66-year-old Mr. Moonves, who has helped CBS solidify its status as the most-watched U.S. TV network, would put his legacy on the line by taking on the challenge of boosting ratings at struggling networks such as MTV and Comedy Central and turning around the sagging fortunes of movie studio Paramount Pictures.
Viacom would give CBS a broader portfolio of networks and give Moonves a rare opportunity to run a major Hollywood studio, which could make it easier to create and acquire programming. All of CBS's major broadcast rivals -- ABC, NBC and Fox -- are part of corporations that include top film studios.
-- Bloomberg News