Viacom, CBS Form Special Committees to Review Possible Merger -- 2nd Update

By Keach Hagey, Joann S. Lublin and Joe Flint 

The boards of Viacom Inc. and CBS Corp. are moving quickly to explore the merger recommended by their controlling shareholder.

A day after Sumner Redstone's National Amusements publicly urged the media companies to look into a possible merger, Viacom's board of directors formed a special committee consisting largely of newcomers handpicked by Mr. Redstone's daughter, Shari.

Ms. Redstone emerged victorious from a brutal power struggle over the summer that resulted in the ousting of her rival, former Viacom Chief Executive Philippe Dauman, and a remaking of the Viacom board. Her father, who is 93 years old and not well, has been embroiled in a series of lawsuits over the past year questioning his mental capacity.

The board of CBS, which hasn't been involved in the legal battles, also named a special committee to review a potential recombination, a spokesperson said Friday.

Viacom announced late Friday that its committee will consist of the five new independent board members, Chairman Thomas May and Nicole Seligman, who will co-chair the committee, as well as Kenneth Lerer, Judith McHale and Ronald Nelson. The special committee will also include one longtime Viacom director, Charles Phillips.

The special committee is hiring law firm Debevoise & Plimpton to advise it and intends to hire a financial adviser, Viacom said.

The Wall Street Journal had earlier reported the expected makeup of the committee and hiring of the law firm.

National Amusements, which has an almost 80% controlling stake in both Viacom and CBS, sent a letter on Thursday urging an all-stock reunion of the two companies, a decade after splitting them apart. The holding company said the combined company -- which would join CBS's broadcast network and Showtime with Viacom's Paramount Pictures studio and MTV and Nickelodeon cable networks -- could better respond to the challenges facing the media industry.

The focus on a potential merger has put the search for a new chief executive at Viacom on the back burner, according to people familiar with the matter, since a merged entity would likely be led by CBS CEO Les Moonves, a darling of Wall Street. Viacom announced last week that its interim CEO, Tom Dooley, would depart in mid-November.

While Mr. Moonves has thrown cold water on the notion of a merger recently in public, saying he likes the current hand he has at CBS, he has been discussing it with Ms. Redstone for some time, according to people familiar with the matter.

Last week, Ms. Redstone, Mr. Moonves and Mr. May met in New York, according to people familiar with the matter.

The companies' special committees will be tasked with determining whether a merger makes strategic sense and on what deal terms.

Write to Keach Hagey at [e-mail], Joann S. Lublin at [e-mail] and Joe Flint at [e-mail]

(END) Dow Jones Newswires

September 30, 2016 17:33 ET (21:33 GMT)

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