National Amusements, the holding company for the family of Sumner Redstone, says it has asked the boards of CBS and Viacom to discontinue the exploration of potentially combining the two media companies.
National Amusements holds about 80% of the voting stock in each company.
"We have concluded that this is not the right time to merge the companies," the company said in a statement.
Earlier this year, the Redstones ousted long-time Viacom CEO Philippe Dauman after a long, public boardroom battle.
Under Dauman, Viacom's revenues and earnings fell as cable network ratings and ad sales declined and Paramount Pictures produced a number of flops.
After Dauman left, National Amusements asked the boards of Viacom and CBS to study a potential merger that would have likely left CBS CEO Les Moonves in charge. At investor conferences, Moonves had been non-committal about a combination, asserting that CBS was big enough to compete in the TV industry as is.
Viacom last month named as CEO Bob Bakish, who had run the company's international operation as CEO. Bakish said he had plans to turn around Viacom by pursuing greater collaboration among its networks and divisions and by investing in programming.
His priorities include improving ratings at MTV and Comedy Central and getting Paramount back on track.
Here is the text of National Amusements' letter to the boards of CBS and Viacom:
Members of the Boards:
This past September, we asked the boards of CBS and Viacom to consider a potential combination. We believed that given the industry landscape, a merger might redound to the benefit of both companies and their shareholders. On a parallel track, we urged both companies to move forward with steps to strengthen their operations on a stand-alone basis.
Over the past few months, after careful assessment and meetings with the leadership of both companies, we have concluded that this is not the right time to merge the companies. Following the management changes that the Viacom Board put in place, we have been very impressed with the forward-looking thinking and strategic plan being pursued under Bob Bakish's leadership. We know Viacom has tremendous assets that are currently undervalued, and we are confident that with this new strong management team, the value of these assets can be unleashed. At the same time, CBS continues to perform exceptionally well under Les Moonves, and we have every reason to believe that momentum will continue on a stand-alone basis.
Based on our assessment of the strengths, progress, and future prospects of both companies, we are requesting that the boards discontinue their discussions at this time and focus instead on their independent paths forward.
We are incredibly proud of the talented and hard-working individuals who comprise both companies, and who are truly second to none in the industry. We would like to thank the boards and special committees of both Viacom and CBS for their consideration of our request.
NATIONAL AMUSEMENTS, INC.
/s/ Sumner M. Redstone
Chief Executive Officer
/s/ Shari Redstone