Viacom Stock Soars on CBS Merger Report

A report that Viacom is pursuing a recombination with broadcaster CBS sent the programmer’s stock skyward, closing the day at $33.76, up $2.95 each or 9.6%.

According to TheWrap, National Amusements, which has controlling interests in both companies, is setting the stage for putting the two companies back together. But shortly after TheWrap article surfaced, conflicting reports from Reuters and CNBC said that there were no active discussions between the comanies and no bankers had been hired. Those reports sent Viacom stock down about 2% in after-hours trading.  

CBS shares closed at $58.83 on Friday, up $1.05 or about 2%. The stock was unchanged in after-hours trading.

CBS and Viacom officials declined to comment on the reports.

Viacom and CBS split in 2005 in an effort to unlock value for both companies. While Viacom was considered to be the early beneficiary of the deal because of its youth-oriented cable networks, its stock has floundered in the past few years as management turmoil, falling ratings and an anemic ad market have pounded the stock. CBS, which has benefitted from strong retransmission consent revenue growth, high ratings and a strong, albeit older skewing customer base, has flourished.

Talk of putting the two companies back together has been on and off for years. The latest was in 2016, when the two canceled talks after Viacom CEO Philippe Dauman was replaced by long –time executive Bob Bakish.

In the past, CBS chairman and CEO Les Moonves has balked at a deal because pairing his company with the lower growth Viacom posed no benefit. Viacom, on the other hand, could gain immensely from being paired in carriage negotiations with the broadcast network.

According to The Wrap, Moonves changed his mind, seeing a combined company as more competitive in the changing media environment. The website predicted he would run the combined company.