Paramount Global and former CBS chief Leslie Moonves have agreed to pay $30.5 million to settle allegations of insider trading and trying to hide sexual assault allegations, according to Attorney General Letitia James.

Moonves has to pay $2.5 million, which will be divvied up by CBS shareholders. Those shareholders will also get $24 million from Paramount, with the other $6 million going to "strengthening mechanisms for reporting and investigating complaints of sexual harassment and assault."

In addition, any stock trade by a senior Paramount executive will have to be approved by its chief legal officer.

Since the allegations against Moonves were first reported, former CBS parent ViacomCBS changed its name to Paramount Global.

The settlement is a result of an investigation by James' office that concluded CBS and top leadership knew of the sexual assault allegations against Moonves and hid them from "regulators, shareholders, and the public," with the help of an L.A. police department captain who tipped them off to a confidential sexual assault complaint and helped keep it from being made public.

James also said that a senior executive -- whom she identified as former Chief Communications Officer Gil Schwartz, had sold millions of dollars of CBS stock before the allegations were eventually made public, which she said constituted insider trading.

"Six weeks before the first article about the allegations became public, Mr. Schwartz sold 160,709 shares of CBS stock at an average weighted price of $55.08 for a total of $8,851,852. The stock dropped 10.9% from the day before the news broke to the trading day after," she said.

Also as part of the settlement, CBS has to institute harassment training and revamp its HR, providing biannual reports to the attorney general's office.

“CBS and Leslie Moonves' attempts to silence victims, lie to the public, and mislead investors can only be described as reprehensible,” said James. “As a publicly traded company, CBS failed its most basic duty to be honest and transparent with the public and investors."

She called CBS's and Moonves' actions "persistent and illegal conduct" that broke investor protection laws.

"We are pleased to resolve this matter concerning events from 2018 with the New York Attorney General’s office, without any admission of liability or wrongdoing," said CBS parent Paramount Global. "The matter involved alleged misconduct by CBS’s former CEO, who was terminated for cause in 2018, and does not relate in any way to the current company." ■

ViacomCBS said it has settled its dispute with former CBS chairman and CEO Les Moonves and will not have to shell out a $120 million severance package that had been placed in a trust after his termination, according to a Securities and Exchange Commission filing Friday.

Moonves stepped down in 2018 after allegations that he had sexually harassed several women at the company. 

Terms of the agreement were not disclosed, but according to a joint statement from ViacomCBS and Moonves, the costs of the settlement will be borne by a CBS contractor and Moonves will "contribute the entire settlement amount to various charities."

Back in 2018 CBS said that Moonves had agreed to donate about $20 million of his severance to several organizations supporting the elimination of sexual harassment in the workplace. 

The allegations were first outlined in a July 2018 piece in The New Yorker by Pulitzer Prize-winner Ronan Farrow, which said Moonves engaged in inappropriate behavior with several women including actress Illeana Douglas about 20 years ago. After that piece broke, several other women came forward, and in November of that year the New York Times reported that Moonves had paid a former accuser for years to keep her silence. 

CBS immediately conducted an investigation into those allegations and concluded that while harassment and retaliations weren’t “pervasive” at the broadcaster, the probe found other instances of unprofessional conduct and determined that the company’s policies did not do enough to prevent harassment and retaliation. 

Shortly after Moonves stepped down, CBS said it would not pay a $120 million severance package to the former executive because he was terminated for cause, pointing to the former executive's “willful and material misfeasance, violation of company policies and breach of his employment contract, as well as his willful failure to cooperate fully with the company’s investigation. Mr. Moonves will not receive any severance payment from the Company.”

Moonves fought that claim and filed for arbitration on Jan. 16, 2019 to get back the award.  

In the Friday SEC filing, ViacomCBS said that the disputes between the company and Moonves have been resolved and that on May 14, the parties dismissed the arbitration proceeding, adding that the assets in the trust that held the $120 million severance package, “will revert to the company in their entirety.”

Former CBS chairman and CEO Les Moonves has notified the company he intends to fight its board of directors’ decision last month to deny him his $120 million severance package, according to a filing with the Securities and Exchange Commission.

“On January 16, 2019, Mr. Moonves notified the company of his election to demand binding arbitration with respect to this matter,” CBS said in the SEC filing. “The company does not intend to comment further on this matter during the pendency of the arbitration proceedings.”

Moonves stepped down as CBS chairman and CEO in September, after several allegations of sexual harassment were levied at the former chief. A report in the New Yorker detailed allegations that Moonves harassed six women about 20 years ago. In November, the New York Times reported that the former CBS chief had paid one of his accusers for years to keep her silence. Moonves has denied any wrongdoing.

CBS conducted its own investigation of the allegations and in December released a statement that based on its findings it had grounds to terminate Moonves and would deny him the severance package. CBS claimed that Moonves violated company policies, breached his employment contract and failed to cooperate fully with the investigation.

The next step will be to select a third party arbitrator from the American Arbitration Association. While CBS and Moonves could settle, the criticism concerning how the company has handled sexual harassment allegations in the past and the high-profile nature of the case make that option unlikely for the broadcaster. 

The CBS Board of Directors said Monday that after an extensive investigation, it has determined that there are grounds to terminate former chairman and CEO Les Moonves for cause, a move that erases a $120 million severance package for the executive who left under a torrent of sexual harassment allegations in September.

The Board dropped its bombshell on Monday night, adding that its grounds to terminate include Moonves' “willful and material misfeasance, violation of company policies and breach of his employment contract, as well as his willful failure to cooperate fully with the company’s investigation. Mr. Moonves will not receive any severance payment from the Company.”

Moonves was first accused of sexually harassing six women in an extensively reported piece in the New Yorker by Pulitzer Prize-winner Ronan Farrow. In the July piece, Moonves was said to have engaged in inappropriate behavior, including unwanted kissing and touching, with those women -- including actress and writer Illeana Douglas -- about  20 years ago. 

CBS launched an immediate investigation into the allegations -- employing law firms Covington & Burling and Debevoise & Plimpton in August -- as well as looking into what some had called a culture of harassment at the company. 

Moonves denied the allegations and stepped down as chairman and CEO in September, with CBS pledging to donate $20 million of his exit package to charitable organizations. But in the wake of Moonves’ departure the allegations continued to pile up, with more and more women coming forward. In November, the New York Times reported that Moonves had paid one of his accusers for years to keep her silence. 

In its statement the board said its investigation concluded that while harassment and retaliations weren’t “pervasive” at CBS, the probe found other instances of unprofessional conduct and determined that the company’s policies did not do enough to prevent harassment and retaliation.

Related: 60 Minutes Boss Fager Leaving CBS News 

In addition, the board said the investigation found that resources devoted to CBS’ human resource function were “inadequate.” To help remedy that, the board said CBS has appointed a new Chief People Officer, is actively engaged in ways to enhance the HR function, and has retained outside experts to develop initiatives to promote a workplace culture of “dignity, transparency, respect and inclusion.”

“We would like to thank everyone who cooperated with the investigation and applaud CBS’ employees for remaining focused on their jobs during this very difficult time. We look forward to the people of CBS returning their full attention to the outstanding work that they do every single day,” the board said in its statement..

There are big changes ahead for one of the Big Four broadcasters.

For more than 20 years, CBS Corp. was personified by chairman and CEO Les Moonves, booster of broadcast, programmer par excellence, streaming pioneer and, as it turned out, boardroom brinksman and sexual harasser.

With Moonves forced out by a controlling shareholder and the #MeToo movement, the future of CBS might be more complicated than one of Moonves’s shows, in which the identities of the hero and villain were clear and the plot wrapped up in 60 minutes. (Speaking of 60 Minutes, the executive producer of CBS’s acclaimed newsmagazine was also fired last week. More on that below.)

With a leadership vacuum left behind by a very hands-on chief, the two most likely scenarios involved CBS being merged with Viacom or sold to another owner.

Moonves, one of the highest paid executives in the country, had opposed suggestions by CBS vice chairman Shari Redstone’s that CBS consider a combination with Viacom, also controlled by National Amusements, the family holding company set up by ailing 95-year-old Sumner Redstone.

Taking the Pledge

To fight off the Redstones, CBS attempted to dilute their voting rights. The lawsuit that ensued was settled in an agreement that included the departure of Moonves, new directors being named to the CBS board and a pledge by National Amusements not to suggest a merger with Viacom for two years.

Despite the standstill agreement, there are those who still think that with Moonves gone, a combination with Viacom is inevitable.

BTIG analyst Rich Greenfield noted that while National Amusements agreed not to propose a CBS-Viacom transaction, that doesn’t mean it wouldn’t support one if the two companies’ boards reach terms.

One of the big issues making combining CBS and Viacom difficult was management. Moonves would have been the top dog and he didn’t want Viacom CEO Bob Bakish involved with the new company. With Moonves out of the picture, the Redstones can first pick a new CBS CEO and then decide whether that exec or someone from Viacom would run the companies if they were combined.

The other issue was the price: how many CBS shares would Viacom owners get?

While CBS seemed to think that Viacom’s cable networks were an albatross that would weigh it down, Greenfield thinks the Redstones would be smart to consolidate their media assets.

Weighing a Viacom Deal

“We continue to believe a merger between Viacom and CBS offers substantial value creation in terms of revenue synergies, cost savings and balance-sheet strength; we believe the independent directors will agree,” Greenfield said.

For CBS, there are few alternatives, he added. “We simply do NOT see a buyer for CBS beyond Viacom.”

After hitting a low of $54.04 in early trading Monday (Sept. 10), CBS shares bounced back to close at $55.85 on Friday. Viacom had a roller coaster ride, starting at $29.35 on Monday and trading as low as $28.84 on Wednesday before closing at $29.85 on Friday.

Others think any Viacom deal is dead. Sanford Bernstein media analyst Todd Juenger upgraded CBS stock because the chance of a re-merger with Viacom is “near zero” and the possibility that CBS gets sold has significantly increased.

“The management vacancies, need to cleanse the culture, and the agreement to remove the Redstone Trust provision which impedes an asset sale all make the sale of CBS that much easier and more likely (perhaps even necessary),” Juenger said.

The CBS culture appears to need cleansing because in addition to Moonves, Jeff Fager, the executive producer of 60 Minutes and former chairman of CBS News, was also fired. He too had been charged with misconduct with female staffers, but lost his job when he threatened the CBS reporter who was covering his case that she would be harmed if she wasn’t careful with what she reported.

CBS’s problems made it harder for Viacom to focus Wall Street on Bakish’s pitch that he’s turning the cable programmer around.

During a presentation to an the annual Goldman Sachs Communacopia conference last week, Bakish didn’t mention CBS. But afterwards, he was peppered with questions about CBS by CNBC’s David Faber.

Bakish said it’s “easy to get distracted” by the CBS goings-on, but that he focus was on “delivering a turnaround, delivering an evolution.” He pointed to improvements in distribution revenue, audience share and the financial results at Paramount Pictures. But Viacom’s stock price is capped by the potential of a deal with CBS, Faber noted.

“It’s definitely frustrating,” Bakish said. “We are focused on putting points on the board ... I think we’ll get respect for that.”

MoffettNathanson Research media analyst Michael Nathanson said he expects CBS and Viacom to be talking merger a year from now. With time, CBS’s board will have a better idea of how real Bakish’s turnaround is and how Viacom fared in its critical affiliate-fee negotiation with DirecTV.

CBS stock should be higher in 2019. It has the Super Bowl, the chance to increase retrans fees with 75% of its footprint due for renegotiation over the next two years, and some syndication opportunities.

“At that point, we would expect Viacom and CBS to finally consummate their long-anticipated marriage at terms that are more favorable to CBS than earlier,” Nathanson said.

The months-long saga concerning the fate of CBS chair and CEO Les Moonves after claims he sexually harassed several women decades ago played out to its inevitable conclusion Sunday with his departure and a pledge by the company and Moonves himself to donate $20 million to the #MeToo movement.

Moonves’ departure is effective immediately. Long-time CBS chief executive Joseph Ianniello will replace him as president and acting CEO as the search for a permanent chief begins. Ianniello, who joined CBS in 1997, most recently served as chief operating officer and has long been Moonves’ choice as his replacement.

Moonves was first accused of sexually harassing six women in a New Yorker magazine piece in July, who said the former CBS chief forcibly kissed and touched them on several occasions over a period of decades, and when they rebuffed his advances he threatened to ruin their careers. Moonves admitted in July that he may have, several decades ago, made unwanted advances toward female associates, but denied ever tampering with their careers. While he apologized for the unwanted advances, he noted that he has always “abided by the principle that no means no” and never used his position to derail anyone’s career.

News of Moonves departure came about three hours after the New Yorker published a new piece on Sunday, where six additional women came out to say Moonves had sexually harassed or sexually assaulted them. 

Among the allegations were that Moonves had forced women to perform oral sex on him and that he exposed himself to them without their consent. Moonves denied the allegations, adding in a statement that he had a consensual sexual relationship with three of the women about 25 years ago before he came to CBS.

“In my 40 years of work, I have never before heard of such disturbing accusations,” Moonves said in his statement to the New Yorker. “I can only surmise they are surfacing now for the first time, decades later, as part of a concerted effort by others to destroy my name, my reputation, and my career. Anyone who knows me knows that the person described in this article is not me.”

But despite his denials, the latest New Yorker piece appears to be the final straw in what has been a stunning collapse for the CBS executive. Moonves has steered CBS to the top spot among broadcast networks over a 15-year span and as early as last year was considered to be practically untouchable. In the past two months, Moonves has been toppled from the broadcast mountain, and CBS’s stock has plunged as the network, a perennial overall ratings champ, has been thrust into uncertainty.

CBS initiated an internal investigation into the allegations after the first New Yorker piece came out in July and while that is still ongoing, reports said the company was working with Moonves to orchestrate his departure from the broadcaster. On Sunday, those efforts were finalized.

Related: Analyst: Moonves Exit, Viacom Combination Could Be in CBS Future 

As part of the deal, Moonves will receive no exit package until the completion of the internal investigation, and the company said it and Moonves will donate $20 million to one or more organizations that support the #MeToo movement and equality for women in the workplace. The donation, which will be made immediately, has been deducted from any severance benefits that may be due Moonves following the board’s ongoing independent investigation led by Covington & Burling and Debevoise & Plimpton. Moonves will not receive any severance benefits at this time (other than certain fully accrued and vested compensation and benefits), the company said, and  any future payments will depend on the outcome of the investigation. 

CBS and its largest shareholder National Amusements also tied up several loose ends that have hounded the companies for months. CBS agreed to drop a lawsuit that would have challenged NAI’s voting control of the broadcaster and NAI agreed not to push for a merger between CBS and NAI’s other media holding – Viacom – for at least two years.

CBS and NAI also agreed to name six new independent members to the broadcaster’s board of directors -- Candace Beinecke, Barbara Byrne, Brian Goldner, former Time Warner chairman Richard Parsons, Susan Schuman and Strauss Zelnick.

CBS’s new board will consist of 11 independent directors and 2 NAI-affiliated directors. In addition to lead independent director Bruce Gordon, William Cohen, Gary Countryman, Linda Griego and Martha Minow will remain on the board. Shari Redstone and Robert Klieger also will remain on the board as NAI’s representatives.

“CBS is an organization of talented and dedicated people who have created one of the most successful media companies in the world,” vice chair Shari Redstone said in a statement. “Today’s resolution will benefit all shareholders, allowing us to focus on the business of running CBS – and transforming it for the future. We are confident in Joe’s ability to serve as acting CEO and delighted to welcome our new directors, who bring valuable and diverse expertise and a strong commitment to corporate governance.”

A CBS shareholder has launched a class-action suit against the broadcaster tied to the sexual harassment scandal involving several top executives -- including chairman and CEO Les Moonves -- claiming the company knew enforcement of its employee conduct standards was inadequate years before the most recent claims came to light.

News of the suit was first reported by The Hollywood Reporter. 

In July, TheNew Yorker reported that several CBS executives had sexually harassed, abused and assaulted female employees at the network over a period of years. One of the allegations was brought by actress and producer Illeana Douglas, who claimed that several years ago Moonves terminated a development deal she had with the network after she rebuffed his advances. In a statement in the New Yorker article, Moonves said there may have been times “decades ago” when he may have made some women uncomfortable by making advances, but that he has always adhered to the principle that “no means no” and that he has never misused his position to “harm or hinder anyone’s career.” CBS said it is conducting an investigation into the allegations and has hired two outside law firms to lead the probe.

News of the allegations played havoc with CBS’ stock price -- it fell 6% after the New Yorker article broke on July 27 and has been down another 1% since that date. That decline in stock price has hit investors hard, the suit claims.

In the suit, filed in U.S. District Court for the Southern District of New York on Aug. 27, CBS shareholder Gene Samit pointed to company proxy statements filed over the past four years where CBS outlines its employee conduct code. Samit, who is seeking other CBS shareholders who have bought stock since 2014 to join him, says CBS’s board of directors certified its commitment to a bias-free and harassment-free workplace as part of those filings, when it knew it wasn't providing a safe environment for all employees. 

In addition, Samit, who is seeking unspecified damages, claims that CBS, Moonves and chief operating officer Joseph Ianniello made false and misleading statements and failed to disclose that executives, including Moonves, were engaging in widespread sexual harassment and that its enforcement policies to stop such action was inadequate.

“...The foregoing conduct, when revealed, would foreseeably subject CBS to heightened legal liability and impede the ability of key CBS personnel to execute the company’s business strategy," the suit states.

CBS declined to comment. 

In the wake of CBS’ board of directors’ ongoing investigation into the growing sexual harassment scandal surrounding its chairman and CEO Les Moonves, Pivotal Research Group analyst Brian Wieser said it is likely the long-time media chief will exit, and that a once-shelved merger with corporate sister Viacom is back on the table.

CBS’ board said at a previously scheduled meeting Monday that it is in the process of selecting outside counsel to investigate the allegations against Moonves, but took no further action on the matter. Some observers had expected CBS would at least put Moonves on hiatus as the investigation continued.

The New Yorker article uncovered what it called a culture of harassment and abuse at the company over a period of decades. Six women came forward to accuse Moonves of forcibly kissing and touching them over a period of years. The piece also unearthed allegations that former CBS News chairman and current 60 Minutes executive producer Jeff Fager inappropriately touched some female employees and allowed harassment to continue on his watch, which he denied in the piece. About 30 former and current employees have alleged various forms of harassment and assault at the hands of other male employees in positions of power, according to the piece.

In a note to clients, Wieser wrote that the New Yorker piece, past rumors and reporting and the apparent inability of the CBS board to “publicly investigate either issue in a more timely manner – suggest serious problems at the top of the company.

“The company will not be viewed by many key industry participants as taking workplace safety seriously without significant action, which we think the Board will realize has commercial consequences, if not legal and moral ones,” Wieser continued. “Consequently, it seems likely to us that CEO Les Moonves will be eventually removed from his role.”

CBS stock, which has been hammered in the days after the New York article surfaced July 27 – the stock lost about 11% of its value between July 27 and July 30 – was up 2% (97 cents) to $52.25 each in early trading Tuesday.

Wieser wasn’t alone. According to reports, Cowen & Co. analyst Doug Creutz downgraded CBS to “market perform” from “outperform,” adding that Moonves should step down and immediately be replaced by current chief operating officer Joseph Ianniello. Ianniello was focus of a separate battle between Viacom and CBS vice chair Shari Redstone and Moonves. Moonves had handpicked the COO to be his successor, but Redstone wanted Viacom CEO Bob Bakish. Whether the connection to Moonves could taint Ianniello – against whom no accusations have been made – with the board, is a nagging question.

While the absence of Moonves, who has been the face of CBS and the catalyst for its growth over the past several years, will create a power vacuum and will at least have a short-term impact on the broadcaster, it is a needed step, Wieser noted. The bigger impact could be that without Moonves at the helm, the previously shelved combination with Viacom is now likely to occur.

Moonves had been a big opponent of the merger, which had been championed by  Redstone. After a public battle, Redstone pulled the merger off the table, as the entity that controls her shares in the companies – National Amusements – was pulled into a legal battle with CBS.

“Without Moonves at the helm, we think CBS will be less able to persuade investors that it is better off on its own,” Wieser wrote.

CBS said it is in the process of hiring an outside counsel to look into sexual harassment allegations against its current chair and CEO Les Moonves, and has decided to postpone its annual meeting of shareholders on Aug. 10 as its investigation continues.

Moonves was the subject of a detailed New Yorker magazine article into a culture of sexual harassment at CBS. Six women came forward accusing Moonves of forcibly kissing or touching them over the past two decades. The article also depicts a culture of harassment at the network, citing 30 former and current employees who have alleged various forms of harassment and assault at the hands of other male employees in positions of power.

In a statement, CBS said no other action was taken on the matter at the board meeting today. CBS will announce a new date for the shareholders meeting at a later time.

CBS stock, down about 6% when the New Yorker article was published online Friday, dipped another 5% on Monday, closing at $51.28 per share. 

CBS stock plunged Friday after the company said it would open an investigation into claims in a New Yorker magazine article that its CEO Les Moonves engaged in inappropriate behavior with some employees over a period of decades.

The article, written by Ronan Farrow – who won the 2018 Pulitzer Prize for public service for exposing allegations of sexual harassment and assault by former Miramax CEO Harvey Weinstein – is said to include allegations of unwanted kissing and touching that occurred 20 years ago, as well as many that occurred more recently. 

According to the article, six women have come forward, including actress and writer Illeana Douglas, who said she was sexually assaulted and then fired because she did not consent to Moonves's advances, and writer Janet Jones, who said Moonves forcibly kissed her during a business meeting. The article also depicts a culture of harassment at the network, citing 30 former and current employees who have alleged various forms of harassment and assault at the hands of other male employees in positions of power.

Moonves, according to a statement he issued to The New Yorker for the piece, admitted some mistakes, but denied misusing his position.

“Throughout my time at CBS, we have promoted a culture of respect and opportunity for all employees, and have consistently found success elevating women to top executive positions across our company," Moonves said in a statement to The New Yorker. "I recognize that there were times decades ago when I may have made some women uncomfortable by making advances. Those were mistakes, and I regret them immensely. But I always understood and respected—and abided by the principle—that ‘no’ means ‘no,’ and I have never misused my position to harm or hinder anyone’s career. This is a time when we all are appropriately focused on how we help improve our society, and we at CBS are committed to being part of the solution.”

The Hollywood Reporter first broke news of the New Yorker article, which prompted the CBS response. It had been rumored for months that Farrow was working on an expose of CBS corporate culture.  

CBS stock was down as much as 7.5% ($4.32 each) to $53.21 per share in early trading Friday. The stock began to claw back in later trading – it closed at $54.01 (down 6%, or $3.52 each) on July 27.

In a statement, CBS said it would investigate the claims.

“All allegations of personal misconduct are to be taken seriously,” CBS said in a statement. “The Independent Directors of CBS have committed to investigating claims that violate the company’s clear policies in that regard. Upon the conclusion of that investigation, which involves recently reported allegations that go back several decades, the board will promptly review the findings and take appropriate action.”

Moonves has been with CBS since 1995, becoming CEO in 2006 and was named chair in 2016. Through his leadership, CBS had a 15-year run as the most-watched broadcast network (a streak that was broken by NBC earlier this year), and has been a leader in extracting retransmission consent revenue from distributors.

Moonves has been locked in a battle with the broadcaster’s biggest shareholder – CBS vice chair Shari Redstone – over control of the company. Redstone had locked horns with Moonves over an attempt last year to recombine CBS with its former corporate sister Viacom – he was against it. While Redstone backed off on putting the two companies together, CBS sued National Amusements, the holding company for the Redstone family’s CBS and Viacom stock, in May to stop it from ousting board members or changing bylaws to push through its agenda. National Amusement counter-sued, claiming Moonves and CBS had no right to take away control. The trial over that matter is slated to begin in October.

In its statement, CBS acknowledged the “very public legal dispute.”

“While that litigation process continues, the CBS management team has the full support of the independent board members,” CBS continued. “Along with that team, we will continue to focus on creating value for our shareowners.”

The Hatfield-McCoy-like battle between National Amusements Inc. chair Shari Redstone and CBS chairman and CEO Les Moonves continued to escalate Tuesday, after NAI filed a counterclaim with Delaware Chancery Court claiming it never demanded a merger between the broadcaster and its former corporate sister Viacom, adding that it has already told Viacom’s board it no longer supports a deal.

NAI’s suit comes in response to a CBS filing last week asking the court to push through its request for a special dividend that would ultimately dilute NAI’s voting control of CBS from 80% to 20%. NAI has since amended its bylaws so that any vote on issuing dividends would require a super-majority (about 90%) of board votes to be approved.

CBS and Viacom split in 2006, partly in an effort to unlock value at the cable networks by unshackling them from what at the time were thought to be CBS’s low-growth assets. But in the decade since the split the opposite has happened – CBS has grown into the most-watched broadcaster in the country while Viacom has struggled.

Redstone has requested that both sides evaluate a recombination twice – in 2016 and 2018 – with both sides convening special committees of independent directors to look into the matter in February.

CBS has contended that NAI is determined to push through a merger and alleges it has tried to tamper with its board makeup to ensure that happens.

In a statement, CBS said it still fears NAI and Redstone has abused its power and can no longer be trusted to act in the interests of all shareholders.

“Today’s reactive complaint from NAI was not unexpected,” CBS said in a statement. “The amended complaint filed last week by CBS and its Special Committee details the ways in which NAI misused its power to the detriment of CBS shareholders, and was submitted after careful deliberation by all involved. We continue to believe firmly in our position.”

But NAI claims it would not support a merger that was not approved by the boards of both companies and that the main motivation for the recent flurry of lawsuits is that Moonves is tired of having a boss.

“CBS board and special committee took their actions not in response to any genuine threat, but instead because Les Moonves has tired of having a controlling shareholder,” NAI said in a statement. “While Les Moonves is an extremely capable television executive, neither he, nor the board acting at his behest, is entitled to strip NAI of its voting control.”

According to the Tuesday filing, Redstone and Moonves apparently agreed that a merger could be beneficial earlier in the year, adding scale to both companies as their peers continued to do deals to beef up their offerings. But CBS soured on a combination later on, especially after Moonves chafed at recommendations that current Viacom CEO Bob Bakish be given a prominent role in the combined entity.

In the Tuesday filing, NAI said that it acquiesced to Moonves’ demands that Bakish not be named his successor when Moonves is no longer CEO, adding that the CBS chief has reaped more than $700 million in salary and bonuses from the company during his tenure. In his latest employment deal renewed in May 2017, CBS cannot reduce Moonves’ salary or bonus and the company must consider increasing his compensation if it falls below that of any other media executive. Moonves deal also includes a $180 million payout if he terminates his employment for good reason, including the naming of a current or former media CEO to the board, or if a majority of the board, its compensation committee or the nominating and governance committee are not “Original Independent Directors.” 

Sanford Bernstein media analyst Todd Juenger weighed in on the ongoing soap opera surrounding CBS- and its largest shareholder National Amusements Inc., adding in a note to clients that no matter what comes out of the broadcaster’s previously scheduled broad of directors meeting later today, there is little chance that a CBS-Viacom merger will ever see daylight.

Investors were apparently still nervous – CBS stock was down nearly 5% ($2.47 each) to $51.36 per share in afternoon trading Thursday (May 17), while Viacom shares dipped 3 cents each (0.1%) to $28.23 each. 

CBS and its largest shareholder National Amusements, have been at each other’s throats since Monday, when the broadcaster filed a suit to try to block NAI from interfering in its Thursday board meeting. At the top of the agenda of that meeting was a proposal to issue a special dividend to shareholders which would dilute NAI’s voting control of CBS from 80% to 17%. CBS had asked the court to issue a temporary restraining order against NAI to keep it from interfering with the special meeting.

While a Delaware court denied CBS’s request for that TRO, Juenger wrote that it really doesn’t matter in the context of a CBS-Viacom merger, the catalyst for all of the recent consternation. The CBS board already unanimously rejected a Viacom merger.

Juenger believes that NAI’s actions yesterday to change CBS’s corporate bylaws to require a super-majority vote to approve board actions concerning dividends or changes to its bylaws, basically takes the dilution effort off the table. CBS, though, said in its statement that it still plans to go through with the special dividend vote today anyway.

But whether CBS is successful or not is basically moot. According to Juenger, NAI can’t force CBS to merge with Viacom and the broadcaster has made it pretty clear that it doesn’t want a combination.

“The unanimous vote of the CBS Special Committee stands, and we don’t see any plausible way it could be reversed,” Juenger wrote. “If you don’t believe us, then how about taking NAI’s own words: NAI had, and has, no intention of forcing a merger, whether by removing and replacing the members of the Special Committee or otherwise. It would be impossible, we think, for NAI to now go and do exactly what they told the court they wouldn’t do. Especially given the intense level of scrutiny that NAI will now be under (which may have been CBS's goal all along).”

Juenger adds that there are also reams of Delaware case law that upholds the independence of special committees and prevents them from being coerced by controlling shareholders.

“We cannot think of a more textbook case of coercion than a situation in which a controlling shareholder replaces a board that just rejected a transaction and asks the new board to approve the same transaction,” Juenger wrote.

What might change is the relationship between NAI and CBS management. And while it won’t be easy to work together given the contentious nature of the recent lawsuits, Juenger hoped that a middle ground could be reached.

“Given NAI’s promise, and fiduciary duty, to act in the best interest of CBS shareholders, we expect they should make every effort to find a way to continue working together,” Juenger wrote. “In the event they cannot (by either party’s decision), to the extent that leads to the conclusion that the best future for the CBS Corporation, and its shareholders, is likely to be acquired/combined with a larger platform company, then the exit of CBS management wouldn’t matter, anyway.”

A Delaware Chancery Court judge ruled against CBS in its quest to keep its largest shareholder from interfering in an upcoming special board of directors meetings, denying the broadcaster’s request for a temporary restraining order.

CBS had filed suit on Monday, claiming that NAI could disrupt the meeting, which was to include a vote to issue a special dividend that would dilute NAI’s voting control of CBS from 80% to 17%. NAI filed its own response and yesterday also amended CBS’s bylaws to require any major issue be approved by a super-majority of directors.

“We are pleased by the court’s decision to deny CBS and its special committee’s unprecedented motion to try to deprive a shareholder of its fundamental voting rights,” NAI said in a statement. “The court’s ruling today represents a vindication of National Amusements’ right to protect its interests. As we intend to demonstrate as the case proceeds, the actions of CBS and its special committee amount to a grievous breach of fiduciary duties and show no regard for the significant risk posed to CBS and its investors.”

Heading into the shareholders meeting this afternoon, CBS did not appear disconcerted about the ruling, vowing to continue to fight for shareholders’ interests.

“The judge today found that the allegations in our lawsuit ‘are sufficient to state a colorable claim for breach of fiduciary duty against Ms. Redstone and NAI as CBS’s controlling stockholder.’ We could not agree more," CBS said in a statement. "While we are disappointed that the judge did not grant a TRO, the ruling clearly recognizes that we may bring further legal action to challenge any actions by NAI that we consider to be unlawful, and we will do so. We remain confident that we will prevail in the lawsuit previously filed by CBS and the members of its Special Committee.

“As previously announced, the CBS Board will hold a meeting at 5 p.m. today to consider declaring a dividend of shares of Class A common stock to all of the Company’s Class A and Class B stockholders, as is permitted under CBS’ charter," CBS continued. "This dividend would more closely align economic and voting interests of CBS stockholders without diluting the economic interests of any stockholder.”

CBS chairman and CEO Les Moonves, currently at odds with his biggest shareholder over the pending merger with former corporate sister Viacom, kept his compensation relatively steady in 2017, raking in $69.3 million in salary, bonus and other awards for the year.

Moonves’s haul was about the same as the prior year, when he brought in $69.6 million. For 2017, the broadcast chief’s base salary was steady at $3.5 million. And though his annual bonus was much lighter in 2017 at $20 million – he received a $32 million bonus in 2016 – he more than made up for it in stock awards. According to a proxy statement filed with the Securities and Exchange Commission Friday, Moonves received $43.7 million in stock awards in 2017, compared to $31.9 million in 2016.

Moonves and CBS are reportedly in negotiations to merge with Viacom, and CBS has submitted a proposal that valued the cable programmer at below its current stock price while placing CBS management in all of the top positions at the combined company. That has reportedly miffed Viacom execs as well as CBS and Viacom vice chair Shari Redstone, whose family controls 80% of the vote of both companies and who has been a big backer of Viacom CEO Bob Bakish. Viacom was expected to make a counter offer to the CBS proposal, and negotiations were expected to continue.

Chief operating officer Joseph Ianniello, who Moonves has reportedly picked to be his No. 2 at the combined company, saw his total compensation reduced by about 24% to $22.1 million in 2017 from $29 million in 2016, mainly due to loser stock awards. Ianniello received about $4.2 million in stock awards in 2017, compared to $10.7 million in 2016.

Other executives ended up with about the same packages as the previous year. Senior executive vice president and chief legal officer Lawrence Tu netted total compensation of $8.1 million in 2017, compared to $8.5 million the previous year. And senior executive vice president, chief administrative officer and chief human resources officer Anthony Ambrosio received $5.7 million in 2017 compensation, slightly higher than the $5.3 million he received in 2016. Senior executive vice president and chief communications officer Gil Schwartz received $4.7 million in total compensation in 2017, down from the $5.1 million he received in 2016.

Merger talks between CBS and Viacom could hinge on who gets selected to take the No. 2 spot at the company behind expected head honcho Les Moonves, according to a CNBC report.

CNBC’s David Faber said that Moonves’ choice for the No. 2 executive slot – current CBS chief operating officer Joseph Ianniello – differs from the pick of top shareholder and vice chair Shari Redstone. According to Faber, Redstone wants current Viacom CEO Bob Bakish to take the No. 2 spot.

Ianniello has been a long-time favorite of CBS chair and CEO Moonves – he was chief financial officer for four years (2009-2013) before being named COO in 2013, and he has a stellar reputation as a deal maker and savvy business executive, having first joined CBS as a VP in 2000 from accounting firm KPMG. Ianniello has long been considered to be Moonves’ replacement when he eventually retires, and the COO has a clause in his employment deal that would pay him $70 million if he is no longer Moonves’ top lieutenant. Bakish apparently has a similar clause in his employment deal but the amount was not immediately known.

Earlier reports have said that CBS is planning a low-ball offer for a Viacom deal, proposing an all-stock offer that would value Viacom below its current market price. Faber said in his report earlier today that there is still a possibility CBS could offer an at or above market price for Viacom.

Investors, at least for the moment, appear to be favoring CBS’ stance, driving the stock up 2% ($1.11 each) to $51.82 per share in early trading. Viacom shares were down 3.4% ($1.04 each) to $29.51 per share in early trading.

CBS plans to make an all-stock offer for Viacom that would value Viacom at less than its current market capitalization, according to a report from Reuters that cites people familiar with the matter.

The offer, which is expected to be submitted in the next few days, would put CBS CEO Les Moonves in charge of the combined company for at least two years, the report said.

CBS and Viacom are controlled by the family of media mogul Sumner Redstone, whose daughter Shari Redstone, vice chair of both companies, has encouraged their boards to consider a combination.

CBS’s low-ball bid signals that it thinks it is the more powerful and valuable company. It would also signal that difficult negotiations are ahead.

The two companies has been combined but were split by Sumner Redstone more than 10 years ago. The Two companies considered a combination in 2016.

John Janedis, analyst at Jefferies, said that a recombination of CBS and Viacom faces hurdles, with price and leadership among the key issues.

Janedis noted that similar issues, including governance and management autonomy, were issues the last time the companies considered combining.

“A theme that looms larger this time around is likely carriage for the combined company's networks and any potential dis-synergies,” he said in a note Monday (April 2).

“The challenges on the traditional media distribution models are all very real, though the solutions outside of scale don't necessarily guarantee successful outcomes,” Janedis said. “Assuming press reports are accurate, a take-under would make it very difficult to consummate a deal, in our view. It will be interesting to see to what extent a stalemate could translate to other potential bidders for either asset.”  

CBS says its over-the-top direct-to-consumers services already have nearly 5 million subscribers, well ahead of expectations.

Speaking on CBS’s earnings call Thursday with analysts, CBS CEO Les Moonves said that subscriber growth for CBS All Access and Showtime’s OTT product are “far beyond where we expected them to be.”

Moonves said CBS expects to exceed its goal of 8 million subscribers by 2020.

He noted that the streaming services generate higher fees than traditional distribution and create a direct relationship with viewers. That relationship yields valuable data, creating advertising that generates higher rates.

The OTT services area also attracting the next generation of viewers, Moonves said. The average age of viewers on CBS All Access is 20 years younger than viewers who watch on broadcast and cable.

Similarly, CBS’s OTT news service, CBSN, has a young audience, with 80% of viewers between the ages of 18 and 49, and an average age of 38.

Related: CBS Studios International, Amazon Prime Work Out Multi-Season Deal for ‘The Good Fight’

CBS will be following the CBSN model with two more products. CBS Sports’s direct-to-consumer service will launch later this month, just before the start of March Madness and The Masters.

In the fall, an entertainment news service based on Entertainment Tonight will launch.

Both new services will be free and ad-supported.

“We’re setting ourselves up for the direct-to-consumer future,” Moonves said.

CBS All Access will also be going international, launching in Canada in June, and then in Australia and Europe.

With its OTT business, Moonves said CBS is actually adding total subscribers and expects to surpass its goal of $2.5 billion in retransmission and reverse comp income by 2020.

"In a nutshell, changing viewer habits are resulting in more subscribers for us and at higher rates,” he said.

CBS and Viacom said late Thursday that their respective boards of directors have formed special independent committees to evaluate the potential combination of both companies.

The move has been expected for weeks. CBS’ and Viacom’s split in 2005 and their largest individual shareholder National Amusements, headed by media mogul Sumner Redstone and his daughter Viacom and CBS vice chair Shari Redstone, tried to recombine the companies in 2016. That plan was abandoned later that year, but in recent weeks reports have surfaced that Shari Redstone had been interested in revisiting a merger. Viacom CEO Bob Bakish and CBS chairman and CEO Les Moonves were said to have had discussions about a possible merger last month and it was expected that talks would resume after a scheduled board meeting of both companies Feb. 1.

In a statement National Amusements said it “supports the processes announced by CBS and Viacom to evaluate a combination of the two companies, which we believe has the potential to drive significant, long-term shareholder value.”

Whether the deal will happen remains to be seen. But some analysts have been pushing for a recombination for months. Moonves, who has resisted a merger in the past, is said to be more open to a deal in light of the recent consolidation activity in the industry. In October, AT&T announced a $108.7 billion merger plan with Time Warner and in December The Walt Disney Co. agreed to buy certain programming assets from 21st Century Fox for $66.1 billion. With its large content brethren getting even larger, some analysts believe that CBS could benefit from Viacom’s programming assets. Viacom, which has struggled with ratings declines and a sluggish ad market, could benefit from CBS’s position as the No. 1 broadcast network in carriage negotiations.      

There were no details as to which directors are on the special committees or how long it will take to evaluate a possible merger. Both CBS and Viacom said they would have no comment until the process is complete.

CBS and Dish Network managed to hammer out a retransmission-consent agreement and end a blackout of satellite subscribers, but there was no announcement that the network would be streaming on Sling, Dish’s skinny bundle service.

Neither company would comment, but sources familiar with the situation said CBS resisted being put on Sling TV, just like in 2014, the last time the two companies negotiated a carriage deal.

Related: CBS, Dish Reach Carriage Pact

The objection CBS has with Sling TV is that the streamer doesn’t want the signals of all CBS affiliates. In its streaming deals, including CBS’s own over-the-top, direct-to-consumer service CBS All Access, the network cuts the affiliates in for a piece of the pie.

Not getting CBS on Sling TV is not good for Dish, the first major virtual multichannel video programming distributor. Sling is approaching 2 million subscribers, making it the largest of the vMVPDs, according to a recent report by Barclays analyst Kannan Venkateshwar.

It is important to Dish that Sling TV add subscribers as cord-cutting and cord-shaving reduce the number of traditional pay TV customers.

“Sling's continued growth could give it enough scale in the next couple of years to drive operating leverage,” Venkateshwar said. “We believe the addressable market of cord-cutters could grow to 31 million over the next decade, making this a sizable opportunity if Dish continues to grow Sling. Strategically, this is also likely to add to Dish’s value for counterparties.”

CBS CEO Les Moonves maintains that no skinny bundle can prosper without CBS in its lineup. And other than Sling, CBS has been signed up by most of the other big vMVPDs, including DirecTV Now, YouTube TV and Hulu.

Being on these new platforms is also good for CBS.

"When consumers cut the cord and switch to skinny bundles, the economics get better for us, growing rates as well,” Moonves said during the company’s third-quarter earnings call with analysts earlier this month.

“When a viewer switches from a traditional distributor to a streaming skinny bundle, CBS’s fee doubles, he said. If they subscribe to CBS All Access, CBS’s haul sometime triples. “OTT is a more profitable business model.”

Another analyst, Marci Ryvicker of Wells Fargo, noted that CBS’s agreement with Dish came a day or so after CBS said it was significantly far apart in talks with the satellite carrier.

Related: Analyst Says as Dish Battle Rages, Charter Could Be CBS’ Next Big Retrans Fight

“We have been asked who might have ‘caved’ here – our sense is that it was DISH, esp. during a popular NFL-heavy holiday weekend. Content is still king,” Ryvicker said.

Showtime has acquired the rights to adapt the novel The President is Missing, by President Bill Clinton and James Patterson, into a series.

The book is set to publish in June 2018. It tells the story of a U.S. president’s disappearance, with what Showtime said offers the level of detail that only someone who has held the office can know.

“Bringing The President is Missing to Showtime is a coup of the highest order,” said David Nevins, president and CEO, Showtime Networks. “The pairing of President Clinton with fiction’s most gripping storyteller promises a kinetic experience, one that the book world has salivated over for months and that now will dovetail perfectly into a politically relevant, character-based action series for our network.”

Showtime describes the book as “a gripping tale of power and betrayal, with a unique perspective on the pressures and stakes faced by a sitting president.”

The 42nd president of the United States, Clinton has written bestselling non-fiction books including My Life, Back to Work: Why We Need Smart Government for a Strong Economy, Between Hope and History, Giving: How Each of Us Can Change the World, and Putting People First: How We Can All Change America.

The President is Missing is Clinton's first novel.

“I'm really enjoying writing this book and working with Jim,” President Clinton said. “And I can’t wait to see Showtime bring the characters to life.”

Patterson has sold more than 380 million books worldwide, including When the Wind Blows, Women’s Murder Club, and the Michael Bennett and NYPD Red series. Among his books adapted for the screen are Zoo, Women’s Murder Club, Along Came a Spider and Kiss the Girls.

“The White House is such an exciting world to explore and is made even more so with the unique insights of a former President,” said Patterson. “Rich storytelling opportunities for this series abound.”

Showtime is a subsidiary of CBS Corp. CBS chair and CEO Leslie Moonves, who has a relationship with President Clinton, was a key player in getting the deal done.

The latest news out of the always fruitful Allen & Co. conference in Sun Valley, Idaho, is that there isn’t any, as CBS chairman and CEO Les Moonves told Fox Business Network he has “no plans to make a move for another company.”

Moonves no-deal stance echoes Verizon CEO Lowell McAdam, who put the kibosh on rumors that the telephone company was readying its war chest for a run at The Walt Disney Co., yesterday. 

The Sun Valley conference, also known as billionaire’s day camp, has been a veritable petri dish of deals ever since 1995, when Disney initiated its purchase of Cap Cities/ABC at the conference that year. Since then such media mega deals as Comcast’s purchase of NBC Universal, and Amazon’s purchase of the Washington Post were said to have sprung from seeds first planted in Sun Valley.

CBS has been in the thick of rumor talk ever since the company split from former parent Viacom in 2006.  While Moonves effectively shot down speculation that it would rejoin with Viacom last year, most recently it has been included in the long list of possible suitors for Disney and other media companies.

Merger talks has been spurred by AT&T’s pending purchase of Time Warner Inc., for $108.7 billion, including assumed debt. That deal is still undergoing regulatory scrutiny. Moonves told FBN that he believes the AT&T/Time Warner deal will be approved.      

“It’s going to happen,” Moonves told the network.

FBN reporter Charlie Gasparino, said that Moonves admission that CBS is willing to go it alone speaks volumes for the company.

“You know, sometimes stories are not just deals that are happening but deals that may not happen and what Les Moonves is telling Fox Business is that he believes CBS is better alone,” Gasparino said during his broadcast. “He doesn’t see the need to merge, to team up with distribution, or to buy something else. Pretty interesting because they’re always being rumored about buying something or merging with a distribution outlet.”

While traditional Pay TV operators have generally suffered customer declines due to new virtual MVPDs and other over-the-top providers, those very same newcomers have offset losses for the big programmers.

For at least the past two years, most cable programmers have seen traditional TV carriage dip about 2% annually as customers either drop service, reduce their programming packages or take their money elsewhere. The growing number of competitors — the latest, Hulu Live TV, launched its beta-test version last week (see Cover Story) — has steadily chipped away subscriber rolls at the top pay TV distributors.

Comcast, the only major cable operator that gained basic video subscribers last year (161,000) and in the first quarter (42,000) did so largely through retention efforts and the rollout of its next-generation X1 platform. X1 also has given customers better access to subscription video-on-demand services; X1 includes an embedded app for Netflix with others likely to follow.

In April, Comcast launched a wireless service, Xfinity Mobile, that should also boost those retention efforts.

On the programming side, some content providers are the streamlined services counteract losses resulting from their networks being part of a larger pay TV bundle.

Time Warner Inc. chairman and CEO Jeff Bewkes said on an earnings call last Wednesday that virtual multichannel video programming distributors (vMVPDs) are having an impact. “It’s mitigating some of the declines at the traditional providers,” he said. “So, if new offerings can combine that kind of attractive pricing and packaging with the sort of new 21st century on-demand platforms, interfaces, then we think they can definitely attract new subs into the network system. And that’s a great opportunity for Turner and every other network to find its natural audience.”

CBS chairman and CEO Les Moonves said the company will bundle its CBS All Access and Showtime OTT offerings for the first time this year while continuing to offer them separately. For any skinny bundle to survive, he said, it must include the CBS network.

“We are not being affected in any way by any changes in subscription numbers throughout the industry,” Moonves said on the call.

While consumers seem ready to drop premium channels such as HBO, Showtime and Starz from their traditional pay TV packages, they’re snapping them up through other avenues, Morgan Stanley media analyst Ben Swinburne found in a recent report.

In a recent survey of about 3,100 pay TV customers, Swinburne noted that premium uptake is down so far this year compared with last year — about 46% of respondents said they had at least one premium network, vs. 53% in 2016. But he still predicted premium network subscribers would be up in 2017, as they have been for the past five years, due mainly to digital distribution.

Every premium channel has a digital direct-to-consumer counterpart, which also stems the losses. And the vMVPD field, once occupied solely by Sling TV (which launched in 2015), has become increasingly crowded.

In addition to apps from individual networks, services like CBS All Access, Sony PlayStation Vue, DirecTV Now and YouTube TV are increasingly gaining customers. Swinburne estimated by the end of this year, virtual MVPDs will have 3 million subscribers.

Hulu Live’s launch is another sign of increased vMVPD traction, Swinburne said. “Notably, we believe Hulu should benefit from its existing, scaled direct-to-consumer subscriber base and its ability to drive advanced advertising innovation,” he said.

Hulu Live should do well because it will carry “gold” tier networks from The Walt Disney Co., CBS, NBCUniversal and Time Warner, as well as Scripps Networks Interactive’s three core channels of HGTV, Food Network and Travel Channel, said Swinburne. Hulu’s owners — Disney, Fox, NBCUniversal and Time Warner — should also “benefit from involvement in a new distribution platform as pay TV consumption continues to evolve,” he added.

Viacom continues to line up its ducks for an inevitable merger with former corporate sibling CBS after the companies’ largest shareholder, Sumner Redstone, fired off a letter requesting the pairing.

While a hookup could benefit troubled Viacom, analysts said the plan could backfire if Redstone does not use a delicate hand, a trait for which the volatile media mogul is not known.

Redstone’s National Amusements, the theater chain that holds his 80% voting interests in both Viacom and CBS, urged the two companies to investigate a merger. The companies split in 2006, an effort to unlock hidden value.

At the time some skeptics thought the split could hurt Viacom, which lost the effective sledgehammer of retransmission consent from CBS in affiliate-fee negotiations.

Viacom got an early lift from the split — shares rose about 6% in the two months after the transaction — but in the longer run CBS was the real beneficiary. CBS shares have more than doubled since 2006, from $20.17 per share on Jan. 3, 2006, to $54.57 on Sept. 29. CBS also has been on the cutting edge of technology, launching in 2014 its own over-the-top service, CBS All Access, which now has about 1 million subscribers.

CBS chairman and CEO Les Moonves has been credited with much of that success, fueled by strong increases in retransmission consent revenue. CBS is expected to top $1 billion in that category this year, rising to $2.5 billion by 2020.

“For CBS, the opportunity can be distilled to one question — is a merger with Viacom a better opportunity than its standalone growth strategy?” Morgan Stanley media analyst Ben Swinburne wrote in a note to clients. “That case must be made. This is not a combination CBS needs to take on.”

Viacom has had an extremely volatile summer, kicked off by Redstone’s ouster of then-CEO Philippe Dauman from the trust that would control his shares in the event of his death or impairment.

The 93-year-old Redstone, who had been thought to be seriously ill, was apparently rejuvenated by Dauman’s moves to sell a minority interest in Paramount Pictures, the movie studio that Redstone won in a bloody corporate battle with fellow mogul Barry Diller in 1994.

Dauman had been scrambling to pay down debt as Viacom’s ad revenue dwindled in the face of falling ratings for its teen and kid-oriented networks. Viacom still needs to reduce leverage. And, according to the National Amusements letter, a sale of all or a part of Paramount is still off the table. So is a sale of all or part of Viacom to a third party.

That would limit the options for any new CEO, including Moonves. He is an extremely well regarded media executive and most analysts believe he is Viacom’s best shot at a turnaround.

But taking on Viacom’s challenges could present little upside to the CBS executive other than an ego boost. Pressing Moonves to take on that challenge could push him into the arms of another needy media property, The Walt Disney Co.

Disney has had some difficulties as cord-cutting and skinny bundles have eroded the subscriber base of its flagship cable network, ESPN. Chairman and CEO Bob Iger also is nearing retirement — his employment deal expires in 2018 — and the company passed on the former top candidate to replace him, chief operating officer Thomas Staggs, earlier this year.

Moonves, with his experience running broadcast and cable networks, would be an inspired choice to replace Iger. And, at least publicly, Moonves has been indifferent to a Viacom merger, saying at a recent industry conference that CBS was not in active discussions with Viacom. While that doesn’t mean talks couldn’t happen later, some analysts are warning Viacom to use a light touch when dealing with Moonves.

A decade after the split that was supposed to unlock the hidden value inside Viacom, some pundits are calling for the home of MTV Networks to put the old band back together by recombining with broadcaster CBS in an aggressive move to restore value and clout to the once-powerful cable networks.

Recent moves by Sumner Redstone, Viacom’s ailing top shareholder, to possibly oust CEO Philippe Dauman and the board of directors have brought the conversation to the fore.

But many say stitching Viacom and CBS back together would be a long, costly process that might make both weaker rather than stronger.

SpringOwl Asset Management hedge fund manager Eric Jackson has been one of the loudest proponents of reconstituting the old Viacom, combining the broadcast and cable assets and placing CBS chairman and CEO Les Moonves and his team firmly in charge.

Jackson pins most of Viacom’s woes on executive chairman and CEO Philippe Dauman and thinks a CBS-Viacom recombination would offer cost savings and greater efficiencies, as well as the obvious changes in management.

TARGET: NEW MANAGEMENT

Viacom might indeed rise out of the ashes of its current predicament — but possibly too late for Dauman. “Investors will value other management taking over,” Pivotal Research Group senior research analyst, advertising Brian Wieser said in an interview. “You could literally put anyone in the CEO spot.”

Wall Street’s top candidate would be Moonves, who has overseen a huge resurgence at CBS in the past 10 years, while Dauman has seen Viacom’s value diminish. The biggest question, Wieser said, is if Moonves wants to take on the daunting task of reviving Viacom or would rather continue on his current path of growing’s CBS assets.

Under Moonves, CBS stock has more than doubled in price, to $55.17 from $26.64 per share, over the last 10 years.

CBS expects retransmission-consent revenue to reach $1 billion by year-end (up from “tens of millions” after the 2006 Viacom split) and to more than double to $2.5 billion by 2020.

Moonves has been quick to the attack on the over-the-top front, launching CBS All Access, which last year attracted an estimated 100,000 monthly subscribers. CBS has projected it could have 4 million customers by the end of 2020.

Moonves has deflected merger talk, saying on a 2015 earnings call, “We’re feeling pretty strong about ourselves and don’t need any partners.”

One roadblock could be finding an acceptable premium for Viacom, which currently has an enterprise value of about $29 billion, about the same as CBS’s EV of about $32 billion.

Wieser said a Viacom-CBS combination makes sense on some fronts and there could be tons of synergies across the board, but Moonves and CBS would have to articulate their vision for the company for any recombination to work.

Viacom still has value in that its Nickelodeon networks reach more kids than any other programmer, Wieser said. In the music arena, MTV Networks could recapture some of the lost mojo in that sector with new programming introduced at the most recent upfronts. “It really comes down to whether there is a fundamental belief in the durability of the assets,” he said. “I believe there is value in the assets, but it’s understandable why some don’t have that view.”

Others, like Telsey Advisory Group media analyst Tom Eagan, think the risks would outweigh the rewards, adding that Viacom’s problems could also be solved with time and the move toward Total Audience Measurement.

Total Audience, which is beginning to emerge from ratings companies Nielsen and comScore, potentially will track all viewership all of the time, even those elusive viewers who watch content on every device but their TVs.

CROSS-PLATFORM ELEVATION

One of Viacom’s biggest problems has been declining ratings at its youth-oriented networks, which have driven ad sales down and made the company vulnerable in affiliate-fee negotiations.

“The inclusion of more cross-platform measurement is going to help Viacom,” Eagan said. “You could arguably say it will help them more than any other cable-network group, because so much of their viewership is off-linear. But they need to be able to monetize it.”

Wieser wasn’t so sure that Total Audience would be Viacom’s magic bullet. He believes the company’s problems are much deeper, even more than its failure to develop shows its core audience wants to see and the loss of talent like Comedy Central’s Stephen Colbert and Jon Stewart.

“The fundamental problem Viacom has is, it has a controlling shareholder,” Wieser said. “Investors never seem to care [about that] until things go badly.”

CBS chairman and CEO Les Moonves said the broadcaster is considering a lower-priced package of its CBS All Access online service and its standalone Showtime offering for consumers, adding that while so-called skinny bundles haven’t quite caught on with consumers, they are “inevitable.”

Moonves, speaking at the Deutsche Bank Technology, Media & Telecom conference in Palm Beach, Fla., said the company was mulling an offering that would offer both services at a discount to their current pricing. He gave no further details.

 CBS launched All-Access in October 2014, with shows from its content library as well as live network programming in cities where it owns and operates TV stations, for about $5.99 per month. The service has since expanded its live capabilities to include several network affiliates across the country. Moonves said that the network is negotiating with the National Football League to allow NFL games on the service in the future. The networks also is considering an ad-free version of the service – for an additional $4 per month and has been developing original programming for the service, including a new version of Star Trek scheduled for a January 2017 debut. 

Showtime launched its standalone online service in July for $10.99 per month. 

Moonves said while CBS All Access has been successful, “we haven’t pulled out all of the stops.”

“Next year it’s going to add substantially to our bottom line,” he added, especially in 2017 when it launches the Star Trek series, which he said is expected to be an “extraordinary success.”

Moonves didn’t say when the All-Access/Showtime combo would be available. But he did say that consumers are demanding more flexibility in programming packaging and eventually a provider will touch on the right combination of shows and pricing.

“Someone’s going to figure out how to do this and how to give people what they want to watch and it’s not for $100 a month, it will be for $35 or $39 dollars a month where you’ll really get the 12 to 15 or 18 channels that you care about. And not get the karate channel for 25 cents a month,” Moonves said. “That doesn’t make sense anymore.”  

Moonves also said that the consolidation wave among distributors won’t have any impact on CBS’ ability to extract retransmission consent fees. He added that while some disputes get a lot of attention, the vast majority of deals are done quietly.  

“What we have is something they [distributors] need,” Moonves said. “Our content makes them money, they make us money. They pay a fair price for our product. I think the system works really, really well.”

CBS CEO Les Moonves said Netflix and other streaming services were willing to spend at warp speed for the new Star Trek series, which CBS is planning to put on its own over-the-top service, CBS All Access.

Speaking at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco Monday (Feb. 29), Moonves called Star Trek the CBS family jewels and said a lot of thought went into what to do with the new iteration of the sci-fi classic.

“Netflix, Amazon, Hulu, they all offered us a lot of money,” Moonves said. “They all wanted it very badly. We could have taken the quick bucks from Netflix but it shows we’re investing in a property we really believe in for the future.”

Putting Star Trek on CBS All Access could be the beginning of a long-term strategy to have more original programming on All Access, he added.

Read more, including Moonves' comments about GOP frontrunner Donald Trump, at broadcastingcable.com.

Viacom said it has elected CEO Philippe Dauman as executive chairman of the company, succeeding Sumner Redstone, who becomes chairman emeritus.

Redstone on Wednesday stepped down as chairman of CBS, succeeded by CEO Les Moonves.

The moves are a step toward succession at the media companies controlled by Redstone, who at 92 is in poor health and being questioned about his ability to make healthcare and financial decisions.

Viacom's board offered the chair's post to Redstone's daughter Shari Redstone, but she turned it down and will continue as non-executive vice chair.

On Wednesday, Shari Redstone said she supported the election of Moonves as chairman of CBS, but wanted a more independent chairman at Viacom.

Viacom has been performing poorly as its cable networks have suffered from the defection of young viewers from traditional TV to digital entertainment options. Its stock has also suffered, falling more than 40% last year.

Read more at broadcastingcable.com.

CBS executive chairman Sumner Redstone has stepped down from that position at broadcaster CBS, handing the role of chairman to CBS CEO Les Moonves.

The move comes as Redstone, in frail health, has come under scrutiny concerning his mental capacity and ability to make decisions regarding the company.
While Redstone remains executive chairman of Viacom, the other media giant he controls, the CBS move adds to speculation he may do the same for the cable programmer. Viacom's board of directors is scheduled to meet tomorrow (Feb. 4), where Redstone's status could be discussed.

Moonves was nominated by Shari E. Redstone, vice chair of the CBS Board, and his appointment was confirmed by a unanimous vote of the CBS directors. He also will continue to serve as president and CEO of CBS, positions he has held since 2006. Summer Redstone becomes chairman emeritus. Shari Redstone, who was offered the position of executive chairman but declined it, will remain vice chair.

“I am honored to accept the chairmanship of this great company,” Moonves said. “I want to thank Sumner for his guidance and strong support over all these years. It has meant the world to me. I am particularly grateful that Shari Redstone has agreed to continue in her role as vice chair of the company. Her business acumen and knowledge of the media space remain very important to me as we move forward, and I greatly appreciate her support and invaluable counsel. I would also like to thank our excellent board of directors, who have contributed so significantly to our success. The people of CBS have achieved much together, and I believe the best is yet to come.”

Shari Redstone said in a statement: “I have been fortunate to work with Les, and he has clearly established himself as a creative and effective leader who understands both the challenges and the opportunities that are shaping today’s media landscape. I am sure he will make a great chair and I look forward to working with him for many years to come.”

Pay-TV providers in a pitched battle with broadcasters over retrans fees latched on to a comment attributed to CBS CEO Les Moonves at the Code Conference on May 27. “We're programmers," Moonves said, according to reports. "The term 'broadcasting' doesn't mean anything anymore."

The American Television Alliance used the remark to hammer CBS, which has aggressively sought more retransmission compensation under Moonves, who wants what he considers fair value for TV stations that still provide the most popular programming viewed on cable.

"If CBS wants to be treated like every other channel, then by all means, they should surrender their spectrum back to the government and give up all their special government handouts like 'must carry' and other regulatory advantages,” ATVA spokesman Trent Duffy said.

ATVA members include Charter, Time Warner Cable, Dish, DirecTV, telcos and other multichannel video providers, united in their desire to obtain relief from existing must-carry and retransmission-consent regulations.

"A foundational principle of federal communications law is that in exchange for free use of the public airwaves broadcasters agree to take actions that benefit the public.  These principles are enshrined in the Radio Act of 1927 and the Communications Act of 1934, which mandate that broadcasters serve the public interest, convenience and necessity. 

Apparently, that’s news to CBS President and CEO Les Moonves."

But Duffy was just getting started.  

"As retransmission fees continue to skyrocket, local news and public interest programming is dying. Local stations are cutting back newsroom budgets and laying off reporters. There is only a 7% chance that a ‘local’ television station is actually locally owned. According to the FCC, 32% of local TV stations ‘did not air a single minute of news programming.’ 

CBS declined comment, but ATVA's opposite number in the retrans battle, the broadcaster-backed TV Freedom, whose members include the National Association of Broadcasters and the CBS affiliate association, fired back.

“U.S. laws that protect and advance free and local broadcast TV are the sole remaining safeguard guaranteeing consumer access to this highly valued content,” TVfreedom.org spokesman Robert Kenny said. “These laws not only guarantee consumers free access to the lifeline and investigative reporting produced by local TV stations via a digital antenna, but they help ensure that broadcast TV content, including network programming, is available to consumers through traditional pay-TV subscriptions.”

“If the American Television Alliance and its members were truly concerned about the best interests of consumers, they would refocus their efforts on lowering pay-TV customers’ bills and making all charges more transparent on monthly statements.”

CBS Chairman and CEO Leslie Moonves conceded "it's not bad" to own an OTT service like CBS All-Access when striking carriage deals with MVPDs, but he insisted the service is more of a supplementary offering to ensure CBS content reaches cord-free audiences.

"We don't care how or when you watch out content, we just want you to watch it," he said during a BrandMatters keynote conversation with MediaLink CEO Michael Kassen.

As committed as CBS remains to the offering, which launched last fall, Moonves continued, "We like the ecosystem like it is and we hope it stays that way."

The 30-minute session largely served as a platform for Moonves to promote the viability of broadcast TV. The only ripple in the pond concerned ratings and measurement.In particular, Moonves derided overnight ratings as "antiquated" and "basically worthless." Aside from movie advertising and other time-sensitive advertising, "we just want to focus on delivering the best-quality programming that we can and we are not especially concerned about when it is viewed. We just want Nielsen or whoever it is to count it so we can get paid."

CBS grew revenue by 2% to $3.4 billion in the third quarter, fueled by retransmission-consent fees, professional football and gains in content licensing.

The inaugural season of Thursday Night Football helped drive advertising sales up 2% in the period, according to the company. Content licensing revenue rose about 4% in the period.

“Our third-quarter growth reflects the success of our efforts to create and monetize our premium content,” CBS CEO Les Moonves said in a statement adding that during the quarter the broadcaster renegotiated new station affiliate contracts with LIN Media, Tribune Broadcasting, Media General, and Gray Television which will bring it closer to its “stated goal of $2 billion in retransmission consent and reverse compensation revenues by 2020.”

In addition, the broadcaster unveiled CBS All Access, an over-the-top service that for $5.99 per month gives subscribers access to select current CBS shows on demand, live programming from its owned and operated TV stations in 14 markets and access to library programming on demand.

Later on a conference call with analysts, Moonves revealed CBS has reached a content deal with Sony  for its planned over-the-top video service and that as expected, its Showtime premium channel will join Home Box Office in going direct to consumers sometime next year.

While Thursday Night Football, which was simulcast for seven weeks on NFL Network, helped drive ad revenue increases, it also played a role in tamping down cash flow in the period – CBS said adjusted operating income before depreciation and amortization dipped 2% in the period because of additional programming costs associated with new contracts with the National Football League.

At the same time, CBS said NFL programming contributed to the successful launch of three new CBS-owned television series in the 2014/2015 television broadcast season, which all generated higher ratings in their respective time periods compared with the prior year.

Sometimes just a few words paint an immense picture. At this week's Goldman Sachs "Communacopia" conference, both Jeff Bewkes of Time Warner and Les Moonves of CBS uttered a total of four words that can be interpreted as the prelude toward direct-to-viewer service by the premium networks in each mogul's empire, HBO and Showtime respectively.

Bewkes used the words "up until now" and Moonves said "absolutely" in discussing their considerations for selling premium channels content directly as a streaming video service. Such streams would presumably offer an alternative to pay TV channels within a cable or satellite TV subscription. Neither CEO cited details or timetables, but their terse acknowledgements suggest that they are accelerating their consideration of streaming plans.

To be fair, Bewkes and Moonves, like all other top media executives, must be evaluating alternative distribution options all the time. Their separate, coincidental references at the high-profile Goldman Sachs annual event can be seen as simple acknowledgement of their duties to examine and revise their businesses in the context of shifting market situations - in this case, the migration to streamed, on-demand entertainment.

Yet their sparse words resonate with media interests who are pushing for cable-trimming options.  Clearly, HBO and Showtime are in no position now to reveal publicly any plans, which might include separating each network's original productions from the full slate of movies and programs that could be available in a streamed service. The rights issues alone will take years of negotiations.

In full context, Bewkes said "the broadband-only opportunity up until now wasn't [viable.]"  Moonves rhetorically asked if he'd consider streaming Showtime; his "Absolutely" response was an implied "yes" within "I don’t know when the timing is right. It’s very exciting."  Moonves also discussed the prospect of streaming "a Showtime channel in the future ... all over the world.” 

Bewkes devoted more of his Communicopia remarks to doubling the original content carried on Time Warner's Turner channels, which would also create an inventory of new shows for future broadband streams. He did riff about the opportunities for expanding HBO Go, the current "TV Everywhere" service that authenticated subscribers can stream to their digital devices.  Observers at the conference perceived that Bewkes' attitude toward direct-to-viewer services was more cordial than in his remarks at last year's event.

While the few words with their vague signals of streaming intent are a long way from actual implementation, the very recognition of the opportunity marks an important benchmark in producers/programmers/distributors' migration toward direct streaming.  The impact on affiliates is a topic worthy of many, many more words.

Inevitably, barrels of words will be forthcoming about these options.  But no one know exactly when.

 =========================

Media analyst Gary Arlen recalls an industry conference a few years ago at which he predicted that HBO would stream its content directly to broadband viewers, and a top HBO executive on the panel responded, "Never." GArlen@arlencom.com

CBS CEO Les Moonves said the company is considering streaming Showtime content direct to consumers in international markets.

Speaking at Goldman Sachs’ 23rd Annual Communacopia Conference in New York Wednesday, Moonves noted that Showtime currently sells individual shows to other networks in international territories.

“I can see sometime in the future, and I don’t know how long that is, where we’re able to offer a Showtime product and stream it overseas internationally,” he said. “This would be a great way to establish a Showtime channel in the future and stream it all over the world.”

Moonves said that CBS was keeping an eye on Scandinavia, where HBO is offering its programming directly to consumers, rather than through a cable or satellite distributor. “We think it’s very smart.”

Domestic streaming of Showtime directly to consumers seemed a bit further off.

“Is there sometime in the future that that could happen? Absolutely. I don’t know when it is. I don’t know when the timing is right. It’s very exciting,” Moonves said.

Moonves also acknowledged that Tribune Co., which is the largest affiliate group for The CW, owned by CBS and Time Warner, has been looking for more input into how the network is programmed.

Tribune CEO Peter Liguori is a former programmer, Moonves noted. “He would like to participate. He has some good ideas. He’s part of our team. Will there be some change in how the CW is structured going forward? I don’t know.”

Moonves added that Tribune, which recently added the CBS affiliation in Indianapolis, is “a very important part of our future.”

CBS posted higher first-quarter earnings despite losing revenue it earned last year from the Super Bowl and March Madness.

Net earnings rose 6% to $468 million, or 78 cents a share, from $443 million, or 69 cents a share, a year ago.

Revenue slid 5% to $3.86 billion. The year-ago revenues included $280 million from broadcasting the Super Bowl.

“I’m very pleased to be reporting record first quarter profits, driven once again by our fast-growing, higher-margin revenue streams. Thanks to the strength of our base business, as well as new opportunities to monetize our content, our momentum continues to build. And we are confident we are still in the early innings of our terrific growth story,” CEO Leslie Moonves (pictured) said in a statement.

“As we continue to grow CBS as a content company, we also recently took a dramatic step forward when we successfully completed the IPO of CBS Outdoor, which subsequently obtained a favorable REIT ruling from the IRS. The separation of this business will bring us that much closer to achieving our goal of becoming a pure content company and, at current market prices, puts us on track to return about $6 billion of value to shareholders in 2014,” Moonves said. “Looking ahead, with even stronger programming to sell to advertisers, political spending heating up later this year, and new deals coming down the pike in retransmission consent and reverse compensation, we see the back half of 2014 even stronger than the first—and we are positioned for another record year.”

During CBS’ conference call with analysts, Moonves had comments on a number of issues affecting CBS and the TV industry.

·       

*On the upfront: "I believe CBS will once again lead the marketplace in upfront pricing and volume next season. We have the ratings, the broad-based strength of schedule and the stability that agencies and our clients need going forward. (CBS COO Joe Ianniello added that at the CBS Television Network,  the network, “we see momentum building throughout the back half of 2014 with more summer original programming, Thursday Night Football starting this fall and higher ad rates from this year's upfront, which we expect will be strong for us. In addition, the backdrop of a solid macro environment should bode well for the advertising industry in general.

·       

*On C7 vs C3 ratings: “We are monetizing commercials beyond 3 days as well. Just as we've said would be the case, more and more deals are and will be done in C7. Plus we're beginning to benefit from dynamic ad insertion, which allows us to resell inventory at a later date. If there are advertisers who don't want to pay beyond 3 days or beyond 7 days, we have a solution. We will simply sell that inventory to other advertisers on the fourth day and beyond. Viewing beyond 3 days or 7 days adds millions of viewers and represents a 9-digit opportunity for us.”

·       

*On Late Night: “The good news is we expect Dave's final year to do extremely well as we say goodbye to the man I think is the greatest ever in late-night comedy. Of course, Stephen Colbert is also as talented as they come, and we are extremely confident he can be the best of his generation as well.”

·       

*On Summertime: “This year, we're expanding to 90 hours of original programming in the summer, including four original dramas that we own 100%. . . [Advertisers] were not used to broadcast networks putting on summer programming. So the assumption was, it was going to be repeat theater or some crummy reality shows. I think we have changed that entire profile. .  . Our advertising rates are significantly higher than they were a year ago. And advertisers now view us as a 12-month a year programming machine.

·       

*On “the lovely” Aereo: “Aereo is theft. Pure and simple. Some are trying to shift the issue by erroneously suggesting it has to do with our prevention of the cloud or either future innovation. This couldn't be further from the truth. . .  We have long-term deals with our MVPD partners, and down the road, we'll distribute our programming in the ways that make the most sense to us financially, all of them attractive.  . . We don't think we're going to lose in the court. We don't think it's a viable product. And if it was, it won't be viable because it won't have our content.’

·       

*On the threat to TV station groups from FCC activity: “Remember, almost 90% of our people that watch CBS, watch it through satellite, through telcos or through cable. If an affiliate wasn't there, there's obviously a way to get our programming to those people. Having said that, we believe in localism. We believe in our affiliates. The CBS affiliate body is very strong, and we don't view this system as in jeopardy in any way, shape or form.”

CBS’ Entertainment division posted a 5% decrease in operating income to $457 million. The company said the drop reflected the absence of Super Bowl revenues, offset by higher profits from program licensing.

Entertainment revenues were down 9% to $2.30 billion. In addition to the Super Bowl, revenue was hurt by the shift of NCAA Men’s Basketball Tournament games to Turner Broadcasting. Those changes accounted for an 11% decline in revenues.

Content licensing and distribution revenues rose 6%.

CBS’s cable networks posted a 12% increase in operating income to $231 million. The networks grew their revenue by 12% to $537 million, but they also had higher programming costs.

Local broadcasting operating income was up 1% to $200 million. Revenues were down 2% to $626 million and were hurt by the Super Bowl and March Madness shifts. Gains in retransmission revenue boosted the stations. TV revenue was down 5%, with the sports items accounting for a negative 9 percentage point swing.