CBS, Viacom Soar On Renewed Merger Rumors


If 10-year mergers and acquisitions reporter Josh Kosman and veteran journalist Alexandra Steigrad, who work at the nation’s most-known daily tabloid, the predictions of top Wall Street analyst Michael Nathanson are, too.

Viacom and CBS Corporation are reportedly ready to do what the German Democratic Republic and the Federal Republic of Germany began to discuss nearly 30 years ago: reunification.

Kosman and Steigrad, who work for the New York Post, reported late Monday (3/25) that merger talks are coming. And, who will run the combined entity as CEO is topic discussion No. 1.

Prompting the report by the Post is the retransmission fee deal inked at the last minute by Viacom and AT&T-owned DirecTV. With $1 billion in carriage fees no longer in question, a reunification now seems on track, say the reporters.

Kosman and Steigrad talked with one person close to the matter who says CBS’s independent directors are expected to approach the board in the next few weeks. CBS’s board will then approach Viacom with an offer, the person claims.

A price and share swap agreement are being discussed.

As RBR+TVBR reported in late January, Michael Nathanson of MoffettNathanson predicts the wheels are turning and a CBS/Viacom merger by the end of 2019 is a “foregone conclusion.”

The Post report gave CBS shares a much-needed shot in the arm. As of 3pm Eastern, CBS was up $1.98 to $47.51, ending a small month-long decline from the $51 range.

It also halts any concern that CBS would be retreating toward the $43 range, seen on Christmas Eve 2018 — a poor performance period for many broadcast media companies. Still, CBS stock is at a price close to its five-year low, seen in September 2015, and has a target price of $61.81.

The bigger chatter on Wall Street involves Viacom’s Class B stock. As the acquisition, if you will, shareholders could get a premium. That’s why VIA-B was up 8.1% as of 3pm Eastern, to $28.44 on three times its normal volume, with 12.2 million shares traded.

A March 22 stock dip brought Viacom to a fresh five-year low. Yet, it’s a low-fluctuation issue, with trading largely between $25 and $34 during that span.