Just weeks after Shari Redstone ascended to the peak of influence within her family’s media kingdom, she is angling for a big strategic shift that will mark her newly seized territory.
National Amusement, the Redstones’ $40 billion holding company, published a letter that it sent to the boards of the two companies it controls—CBS Corp. and Viacom—asking them to consider a potential combination of the companies.
“We believe that a combination of CBS and Viacom might offer substantial synergies that would allow the combined company to respond even more aggressively and effectively to the challenges of the changing entertainment and media landscape,” the letter reads. It was signed by Sumner Redstone, the ailing 93-year-old billionaire who stepped down as chairman of the two companies earlier this year when questions over his mental competency arose. Shari, his daughter, is president of National Amusement. The company owns 80 percent of voting shares in Viacom and CBS, signed it as well.
The letter recommended that the shift be made in an all-cash transaction, and stockholders of each company would receive shares of the proposed, newly combined company of the same class they currently hold. They also made it clear that they would not accept any third-party acquisitions.
The move would walk back the move the elder Redstone made more than a decade ago to split the companies. The idea in untying the two companies was that Viacom, which, at the time, had a fast-growing roster of cable networks like MTV and Comedy Central, and CBS’s stodgier way of doing business would hold it back. Of course, the opposite has played out. Viacom has struggled to attract new viewers as cord-cutters proliferate and the channels struggle to find a compelling-enough lineup to compete in the age of streaming networks and digital content. The stock, as a result, has tumbled. Over the last three years, shares of Viacom have tanked more than 55 percent. So far this year, it’s down more than 10 percent.
CBS, on the other hand, has enjoyed the spoils of N.F.L. games and other sporting events. Its stock has jumped more than 18 percent in 2016.
A merger of this kind would be a major coup for Shari, and a signifier that she is looking to make her own mark at National Amusement. She has already played a larger role since her father stepped down. This summer, she managed to launch a campaign that ousted her longtime foe Philippe Dauman from his role as C.E.O. of Viacom, as well as from the boards of Viacom and National Amusement. He was also removed from the trust that will control Sumner Redstone’s estate once he passes away or is deemed mentally incapacitated. Tom Dooley, the company’s interim C.E.O., announced last week that he planned to leave Viacom in November. This leaves the path wide open if the two companies do heed the Redstones’ recommendation to combine.
