CBS and Viacom form special committees to evaluate possible combination

Viacom head office

CBS Corp's board is set to discuss a merger with Viacom Inc on Thursday, sources have told Reuters, possibly starting the process of reuniting the two media companies split by mogul Sumner Redstone more than a decade ago. The committee has retained independent legal counsel and is retaining independent financial advisors in connection with this evaluation.

CBS shareholders have previously responded negatively to suggestions over a merger due to Viacom's cable channels ratings struggles, but the more open-minded response here points to the changed media landscape. "In addition, a merger with Viacom would give CBS more cash flow to help prepare for its upcoming National Football League negotiations".

While conversations are taking place, a statement from each company reiterated that there is no guarantee that this process will end in a transaction or on what terms any deal may happen. However, there is also an understanding that the media landscape is changing fast and the potential for the two sides to work together on global growth initiatives offers rationale for a reunion.

Neil Begley, senior vice president of Moody's, said: "The potential of a recombination of CBS and Viacom would provide CBS with increased scale, more diverse assets and a major studio, while it would bring many of those same benefits to Viacom". As of Thursday, Viacom had a market cap of $13.6 billion, with shares closing at $33.21.

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Shari Redstone has long advocated merging the two back together again, but insiders say CBS CEO Les Moonves has balked at the notion.

There's speculation that the deal would be structured as an all-stock transaction with CBS acquiring Viacom. Both are controlled by National Amusements, her family's company.

Viacom's interests include MTV, VH1, BET, Comedy Central, Nickelodeon and Paramount Pictures.

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