With Rumors of a CBS and Viacom Merger, Moonves Sits in a Crosshairs

Late last month, National Amusements, the privately-owned entertainment conglomerate run by billionaire Sumner Redstone and daughter Shari Redstone, sent a letter to the boards of CBS and Viacom. The letter requested that the companies explore a merger that would re-unify the currently independently controlled media corporations.

The letter is only the latest event in drama that has dogged National Amusements over the last year. In a series of “Game of Thrones” political maneuvers, the Redstones ousted Viacom CEO Philippe Dauman, while simultaneously facing competency lawsuits and other legal challenges.

National Amusements is the majority shareholder in both companies and orchestrated the separation of CBS and Viacom in 2005. The division was initially intended to allow Viacom – which includes Nickelodeon, MTV, and VH1 in its holdings – to pursue a younger audience without being bogged down by CBS’s older, more traditional program offerings. Ironically, in the years since, Viacom’s stock prices have been in a steady decline, reaching a five year low in February of this year. In the same timeframe, CBS has managed to consistently outperform other major networks, primarily by catering to an older audience base with more “traditional” programming.

CBS and Viacom have enjoyed a long and tangled history together, since CBS first formed CBS Films, the predecessor to Viacom, in 1952.  At the heart of CBS’ most recent success is its CEO Leslie Moonves, who has lead the media conglomerate since its split with Viacom. Moonves not only gave the green light to CBS megahit “The Big Bang Theory,” but has also instituted a series of strategic licensing agreements for CBS’ library of shows.

“My sense is that they’re hoping Leslie Moonves will agree to take over the combined entity, speculated Fortune reporter Mathew Ingram in an interview with MediaFile. “It all hinges on Les Moonves.

Of course, there’s the possibility that Moonves would not agree to a merger – something he hinted at in September before the letter was sent. If Moonves decided to ignore the letter, the Redstones would have to decide whether merging the companies is more important than keeping Moonves around. Many think removing one of the top CEOs in the media world could be a questionable move. Said Ingram, “I feel like having Les Moonves is more of an asset and is more important than not having him.”

Even if Viacom and CBS were to merge, there are no guarantees that the final product would generate desirable changes in profit and viewership, regardless of any magic Moonves could generate. “ Of course, there’s always the chance that God can’t create profitability out of nothing,” Ingram said, but adding “there’s no where to go but up.”

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