(Reuters) - CBS Corp’s board is expected to discuss a merger with Viacom Inc on Thursday, sources told Reuters, a move that could begin a formal process to reunite the companies split by controlling shareholder Sumner Redstone more than a decade ago.
The board will need to decide if the deal is now attractive enough to CBS shareholders to overshadow concerns that scuttled a proposed tie-up pushed by Sumner and his daughter Shari Redstone in 2016.
The CBS board meeting is regularly scheduled and no announcement may come out of it, said the sources, who wished to remain anonymous because they are not permitted to speak to the media.
Viacom and CBS spokespeople declined to comment.
Viacom Chief Executive Bob Bakish and CBS CEO Leslie Moonves talked about the potential merger earlier this month, Reuters reported.
Viacom’s Nickelodeon and MTV networks and Paramount films could help broadcast-focused CBS’ All Access streaming service become more competitive, and the combined company could also better negotiate with cable and satellite distributors.
“They might be better able to develop more robust OTT offerings faster as a combined entity,” said Michael Nathanson, analyst with Moffett Nathanson, referring to “over the top” streaming.
Some could argue Viacom’s international presence is now more important for CBS given the rapid decline in U.S. cable subscriptions, some analysts have noted.
Walt Disney Co’s recent deal to buy Twenty-First Century Fox Inc assets has stoked a fresh push from Shari Redstone to rejoin the companies her father split in 2006.
Bakish has improved distributor relations, found financing for Paramount Pictures after Chinese investors dropped out and shuffled programming since taking over Viacom in late 2016.
But Viacom shares trade around $33, below a $35 to $38.80 range when the merger was last on the table, potentially making a deal more feasible.
CBS and Viacom last explored merging at the urging of ailing media mogul Sumner Redstone, 94, and Shari Redstone, who control both through privately held National Amusements.
Moonves and CBS’ board had concerns over corporate governance and the deal’s financial rationale, and the Redstones called off the effort in December 2016.
For CBS, which owns the CBS network, local broadcasters and Showtime, taking on cable networks could mean a difficult integration and tough negotiations, said Tim Nollen, analyst with Macquarie Research.
Merging for size alone may not make sense in the long term, and CBS could be better off on its own, some analysts cautioned.
Viacom shares were down 0.4 percent in afternoon trade. CBS shares fell 1.8 percent.
Reporting By Jessica Toonkel; Editing by Meredith Mazzilli
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