National Amusements, the Redstone-family holding company that owns controlling stakes in CBS and Viacom, wants the two companies to explore a merger, according to a news report.
According to Reuters, National Amusements will contact the two media companies and ask them to form independent board committees to look at a merger.
Reuters did not identify its sources and said CBS and Viacom declined to comment.
The company, led by Sumner Redstone and his daughter Shari Redstone, ousted Viacom CEO Philippe Dauman. Viacom, which owns cable networks including Nickelodeon and MTV, has been one of the worst performing companies in the media business.
A combination would put CBS CEO Les Moonves in charge. Moonves has led CBS to high broadcast ratings and diversified its revenues by pushing retransmission consent, international program sales and getting into the over-the-top business.
Moonves has expressed reluctance about a combination, saying that CBS was well positioned as is.
The two companies split from each other 10 years ago. Viacom was expected to be a growth stock, while CBS was expected to be a less exciting performer.
Viacom stock was up almost 2% in mid-day trading. CBS was up more than 1%.
In the wake of the report, analyst Marci Ryvicker of Wells Fargo opined that the idea seemed a reasonable thing for National Amusements to do.
“A CBS-Viacom merger is a possible option—not one that we like at the moment, but the fact that it is being explored is reasonable and not surprising to us,” Ryvicker said in a research not.
She noted that it was important that a merger wasn’t being force on the companies, especially CBS. “Les Moonves clearly gets a say here,” she said.
Ryvicker said the appearance that a deal would be voluntary make her more comfortable with three possible outcomes: Having Viacom borrow to buy CBS at the $100 a share Moonves has mentioned as a target; CBS buying Viacom at a discount, or CBS deciding to remain independent.