Viacom Inc. has asked CBS Corp. to sweeten its merger bid by about $2.8 billion, or almost a quarter more than CBS’s offer, three people familiar with the matter said, indicating the wide gap in the U.S. media companies’ price expectations.
National Amusements Inc, the Redstone family company that controls CBS and Viacom, has pushed them to negotiate a merger by forming independent board committees. Viacom’s request shows how the companies have yet to make progress in their talks.
In a letter to CBS last week, Viacom asked for 0.68 CBS shares for each Viacom class B share, the sources said. CBS had offered 0.55 of its shares for each Viacom class B share, sources have said.
CBS is now considering its next steps in the deal negotiations, said the sources, who asked not to be identified because Viacom’s request is confidential.
CBS and Viacom declined to comment.
Shares of CBS were trading around $52.67 on Monday morning, while Viacom shares were trading around $30.75.
At CBS’s proposed share exchange ratio of 0.55, Viacom would be valued at $11.9 billion, below its current market capitalization of $12.7 billion. Viacom’s counterproposal values the company at $14.7 billion.
Viacom shares have risen by about a third since early November on speculation of new efforts to merge CBS with Viacom, after the previous round of negotiations in 2016 ended unsuccessfully.
In its letter to CBS last week, Viacom also asked for its Chief Executive Robert Bakish to be president and chief operating officer of the combined company, a demand supported by National Amusements, according to the sources.
CBS has asked for its chief operating officer, Joseph Ianniello, to have that role instead, the sources said.
Both CBS and Viacom agree that CBS CEO Les Moonves should lead the combined company, according to the sources.
Viacom said on Monday it would report quarterly earnings on April 25, a departure from its standard practice of reporting earnings in the first week of May alongside CBS, which is scheduled to report its earnings on May 3.
Viacom decided to push forward its earnings announcement date because it believes it has strong numbers to unveil that will boost its negotiating leverage in the merger talks with CBS, two of the sources said.
The merger would combine CBS’ television network, local TV stations and Showtime cable network with Viacom’s cable networks, including MTV, Comedy Central and Nickelodeon, as well as its Paramount Pictures film studio.
The pressure on the media sector to consolidate has increased following AT&T Inc.’s planned $85.4 billion acquisition of Time Warner Inc. and Walt Disney Co.’s recent deal to buy some Twenty-First Century Fox Inc.’s assets for $52.4 billion.
Combined, CBS and Viacom would have more leverage to negotiate prices for their programming with U.S. cable and satellite companies, which face a decline in subscribers amid fierce competition from media streaming companies like Netflix Inc.
CBS investors may be worried that the work to combine the two companies could slow CBS’ growth trajectory, said John Janedis, an analyst at Jefferies.
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