(Photo by: Dennis Van Tine/STAR MAX/IPx 2016)
The big pressure is on: Leslie Moonves, the highly driven chairman and CEO who elevated CBS to heights of fundamental achievements, has to decide rather quickly whether he will agree to jump-start the re-merger of CBS and Viacom.
With the looming gigantic AT&T-Time Warner acquisition deal, Moonves now faces an imperative urgency to put the two companies together again — as strongly advocated by Sumner Redstone, and his daughter Shari Redstone. They certainly has the right to propose what they think should be good for the company. After all, together they own 80% of both CBS and Viacom.
The increased pressure for Moonves to make up his mind is not only because of the potential impact of the AT&T purchase of Time Warner but because, like every star media mogul on the lot, he doesn’t want to appear as out-of-the-loop in what’s going on in the industry.
By agreeing to combine CBS and Viacom now, Wall Street’s focus will suddenly shift from the AT&T-Time Warner deal, which has suddenly become too-hot-to-handle and very controversial issue, to Leslie Moonves, architect of the next media/entertainment star enterprise in the making.
What’s the reason for Moonves to be skittish about the entire project? Well, there’s the usual basic question of, “what’s in it for me?” For somebody who is already super rich and possesses whatever he needs, he should feel entitled to something not yet in his ken, such as a decent stake in National Amusements, the Redstones’ holding company that owns 80% of CBS and Viacom. And, to be sure, full control of governance of the combined company, including the power to choose its board members, setting policy and strategy, and a guarantee of independence, tenure and compensation for any challenging turn of events, including Sumner Redstone’s health.
Moonves not only is Sumner’s top choice to lead the CBS-Viacom enterprise but he’s also a close comrade of Shari Redstone, the vice chairperson of both CBS and Viacom — and more significantly, the president of National Amusements.
But Moonves from the outset wasn’t convinced, according to some analysts, about putting the two companies back together, and certainly not with him as the main man to take on the ambitious project. But things changed quickly: A&T’s acquisition of Time Warner came into the picture, and suddenly the competitive landscape in the industry has hardened and the situation has become more complicated for media and entertainment companies.
Nonetheless, some analysts believe Moonves is currently in the midst of ironing out the challenges involving the huge and unusual task of putting together a re-merger, and in the process negotiating his eventual role in the combined company, including all the challenges of deciding every corporate detail involved, including control and compensation, rights and privileges, and other volatile corporate exigencies.
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Apart from all that, Moonves could achieve one of his deams and become a real Hollywood mogul by owning Paramount Pictures, currently one of the prized prime brand assets owned by Viacom. And CBS, some analysts say, could take advantage of Viacom’s worldwide operations that represent a huge cost savings for the combined company, and benefit from a better relationship with cable operators and satellite companies in negotiating distribution fees.
The intimidating and prickly issue is Viacom’s heavy debt burden and the company’s many underperforming units. One dire result for shareholders is the Viacom board had to cut in half the dividend its pays, a big blow to shareholder confidence. The search is now on for a caretake CEO for Viacom when interim CEO Tom Dooley leaves next month, unless he can be convinced by Moonves to stay on until the re-merger takes place.
Plenty on the plate for Moonves to handle, to be sure, so it becomes even more imperative for him to clear the air soon rather later so he could start doing the mountainous job ahead. Most Wall Street analysts believe Moonves will take on the near-impossible task, if reluctantly — and do a great job.
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