- Les Moonves, chairman and CEO of CBS Corp, resigned Sunday amid sexual misconduct allegations.
- CBS also announced it reached a settlement with controlling shareholder National Amusements Inc.
- That announcement opens the door to a potential CBS-Viacom merger in 2019, according to industry analyst Rich Greenfield.
Les Moonves, chairman and CEO of CBS, resigned Sunday amid allegations he sexually harassed, assaulted, and retaliated against women who rebuffed his advances over the course of his career at the company.
Moonves has denied the allegations. "Untrue allegation from decades ago are now being made against me that are not consistent with who I am," he wrote in a statement Sunday.
Moonves' resignation ran concurrent with the announcement by CBS that the company had reached a settlement with controlling shareholder National Amusements Inc., putting an end to litigation between the two companies. The settlement opens the door to a CBS-Viacom merger in the coming year, according to some industry experts.
We "strongly believe a merger between Viacom and CBS will take place in 2019," Rich Greenfield, media and technology analyst at BTIG, wrote in a research note.
CBS and NAI had been locked in a months-long battle over the issue of whether to put CBS and Viacom together. Once part of the same company, CBS and Viacom (MTV, Nickelodeon, etc.) formally split in 2006.
Shari Redstone, vice chair of CBS Corporation and Viacom and president of National Amusements, had pushed for a remarriage, while CBS and Moonves fought against such a move. The settlement Sunday came with the stipulation that NAI could not propose a merger between the two media companies.
But importantly, according to Greenfield, that leaves open the possibility that independent board members from either company could suggest such a transaction.
CBS has a new board which may be more open to a big move
The CBS board had a big reshuffle Sunday night when six new members were appointed. Candace Beinecke, Barbara Byrne, Brian Goldner, Richard D. Parsons, Susan Schuman and Strauss Zelnick, have all joined the board as independent members.
The appointments mean that a majority of the independent board members were tapped by NAI, similar to the board-member composition at Viacom, according to BTIG, which noted the board's makeup as another reason for the likelihood of a CBS-Viacom merger.
From a strategic perspective, Viacom is one of the few potential buyers for CBS, according to BTIG. AT&T recently completed a media merger acquiring Time Warner (now WarnerMedia), and Verizon has made it clear it's future is with 5G and network improvements, not media deals. Other legacy media companies - including Comcast, NBC, and ABC - would have regulatory hurdles related to an acquisition.
"We simply do not see a buyer for CBS beyond Viacom, which is why it would make sense for CBS to proactively propose a Viacom transaction sooner than later as scale is becoming increasingly critical in the media industry," Greenfield wrote in the note.