CBS/Viacom Merger Caught Up in Management Roles

Ongoing talks regarding the possible merger of CBS Inc. and former corporate parent Viacom isn’t revolving around price or who would head both companies. That would be CBS CEO Les Moonves. Instead, the multibillion dollar deal is reportedly hung up by who would be Moonves’ second-in-command, among other management decisions.

CNBC reported that Moonves is eyeing CBS COO Joe Ianniello, while Shari Redstone, who controls majority shares of Viacom, wants Viacom CEO Bob Bakish assuming the role.

Moonves contends that if the Viacom board of directors wants him to lead the combined companies, he has the right to name his management team. Shari Redstone believes otherwise.

“[The acquisition price] is not actually going to be the key issue whether or not these talks succeed in reaching a deal,” said David Faber, host of CNBC’s “The Faber Report”.

Ianniello, who was recently promoted to the COO position from CFO, has been with CBS since the media company separated from Viacom in 2005. He typically backs up Moonves on fiscal calls.

Bakish, who replaced Philippe Dauman in 2016 as CEO of Viacom, formerly headed Viacom International Media Networks. He has been with the company since 1997.

“So, we are setting up, it would seem, for a potential debate and/or clash between Shari Redstone and Les Moonves about what the reporting structure in the new company will be,” Faber said.

Indeed, as controlling shareholder at Viacom (including Paramount Pictures), Redstone has the right to replace the board or even Moonves, according to Faber.

In addition, both Bakish and Ianniello have clauses in their employment contracts that call for significant financial compensation in the event of a change in ownership of either company. For Ianniello, that reportedly would be $70 million should he not get the No. 2 position in a combined CBS/Viacom.

Analysts contend cost synergies in the merger would range from $500 million to $750 million.

Viacom CEO: ‘Our Brands Coming to Mobile’ in the U.S.

Look for Viacom and its key brands – Paramount Pictures, MTV, Nickelodeon, Comedy Central and BET – to go increasingly mobile in the United States.

Speaking at the Morgan Stanley Technology, Media & Telecom confab in San Francisco, CEO Bob Bakish said recently announced moves partnering with Spain’s Telefónica making Viacom’s brands available on the telecom’s Movistar Play platform, underscored a need to “export” that strategy in the United States.

“We’re also in a very interesting conversation here in the U.S. right now about bringing our brands to mobile, and I believe that will happen in 2018,” Bakish said.

The executive said the year revolves around growing margins in established businesses, new distribution channels as well as improving synergies among internal brands through consumer products, live-events and incremental studio opportunities.

“We see a clear path toward top-line growth,” Bakish said, adding he expects Paramount growth to materialize in 2019.

The executive said Paramount is transforming from an underleveraged “fiscal mess” in 2016 that “ate over” $1 billion in cash, to a unit with a content library growing more than $300 million in value annually.

Half the studio’s release slate will be franchise sequels, with the remaining branded around Nickelodeon.

Viacom in January rolled of the Paramount Network (formerly Spike TV), an ad-supported service distributing original (“Waco” miniseries, starring Taylor Kitsch as cult leader David Koresh) and catalog content.

Future original series include, “Yellowstone,” starring Kevin Costner; “American Woman,” a single-camera comedy set in the 1970s amid the sexual revolution and the rise of feminism, starring Alicia Silverstone and Mena Suvari; and “Heathers” an hour-long pitch-black comedy anthology set in the present day, based on the 1988 cult classic film of the same name.

“[Paramount] is an iconic brand, known all around the world. It’s on a clear path to return to profitability,” Bakish said.

 

 

Viacom CEO: ‘The Cloverfield Paradox’ Sale to Netflix a ‘One-Off’ Deal

Following an underperforming legacy film slate, Paramount Pictures jumped at the chance to offload sci-fi drama The Cloverfield Paradox to Netflix, according to Viacom CEO Bob Bakish.

The subscription streaming video behemoth — which reportedly paid $50 million for the rights — promptly streamed the third installment in the franchise (following 10 Cloverfield Lane in 2016) globally at the conclusion of Super Bowl LII — after paying millions more for a TV commercial aired during the game. A first for a major Hollywood movie.

During the Feb. 8 fiscal call, Bakish described the arrangement —that bypassed theatrical distribution — as “bit of a one-off” deal.

“This was a unique situation that we thought was the right fit for the franchise,” Bakish told analysts. “It allowed us to take advantage of an attractive audience and really create some pretty compelling economics.”

With the domestic launch of the Paramount Network the lone positive for the studio (narrowing operating loss 28% was another) in Q1, the studio has its sights on upcoming tentpole releases Mission: Impossible — FalloutTop Gun: MaverickWorld War Z 2, branded films from Paramount Players (What Men Want, Dora the Explorer) and Paramount Animation (SpongeBob The Movie), and Sega’s Sonic the Hedgehog.

Cloverfield Paradox, which received poor reviews and was slated for April release, apparently didn’t make the cut.

“We’re going to continue to focus the vast majority of our releases on traditional theaters, and we see a great opportunity there to take share driven by our ’19 slate and beyond,” Bakish said. “But, given our production capabilities and the landscape, we’re going to continue to look broadly and creatively for opportunities to create additional value for Paramount.”