Viacom Sidesteps CBS Merger During Earnings Call as Deal Talks Continue

Company touts first domestic ad growth in 5 years, but isn’t ready to announce deal

Viacom CEO Bob Bakish is expected to lead a combined Viacom-CBS company.
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CBS and Viacom had hoped to complete their merger talks by today—when both companies were set to announce quarterly earnings—but were unable to reach the finish line, leading Viacom to sidestep any CBS questions during its Thursday morning earnings call.

Reports surfaced in June that CBS was preparing an offer to re-merge with Viacom. Talks have continued through the summer, but the companies have yet to hammer out all the details.

Until that happens, the companies won’t be commenting publicly on a possible merger.

Jim Bombassei, svp, investor relations and treasury at Viacom, made that clear as he kicked off the company’s earnings call by telling investors, “we will not be responding to questions or comments regarding potential M&A.” Viacom execs did not mention CBS during the call, and no analysts asked them about merger talks.

CBS is similarly expected to avoid any mention of Viacom talks during its own earnings call this afternoon. UPDATE: Thursday afternoon, CBS opened its earnings call with a similar “we will not be commenting on speculation regarding M&A” statement.

While Viacom CEO Bob Bakish—who is expected to lead the combined company—did not discuss a merger, he did tout Viacom’s domestic ad sales increases for the first time in five years (domestic advertising was up 6% year over year, and in this year’s upfront, the company secured its highest rate of change in over a decade), which he said “ushers in a new era of advertising growth at Viacom.”

This summer, CBS and Viacom have navigated several stumbling blocks in a potential deal, including the combined company’s leadership team: Bakish would be CEO; Joseph Ianniello (who has been acting CBS CEO since Les Moonves exited the company last September following more than a dozen accusations of sexual harassment and intimidation) would oversee the company’s CBS-branded assets; and CBS chief financial officer Christina Spade would continue in that role for the new company, according to the Wall Street Journal.

Both companies completed their respective upfront negotiations this summer as reports mounted about a possible deal. CBS wrapped its upfront in June, while Viacom crossed the finish line last week.

This is the third time in the past three years that Viacom and CBS have discussed a merger. They initially split 13 years ago, but first discussed uniting again in 2016 when chairman Sumner Redstone prevailed over former Viacom president and CEO Philippe Dauman after months of fighting over the future of Viacom.

The merger of CBS and Viacom, which seemed like a foregone conclusion for much of 2016, was put on hold in December of that year by National Amusements, which owns 80% of the voting shares of both Viacom and CBS.

The companies again agreed to explore a merger in February 2018, but those talks derailed and resulted in CBS suing majority owners Sumner and Shari Redstone that May. Last September, just before their Oct. 3 court date, the companies reached a settlement on the same day as former CBS Les Moonves exited the company.

As part of that settlement, National Amusements agreed to not pursue a merger between CBS and Viacom for two years, but the CBS board, not National Amusements, initiated these most recent talks.

A CBS-Viacom union, which has been rumored ever since last year’s settlement, would give both companies scale at a time when most of their rivals have completed big mergers, including Disney-Fox, Discovery-Scripps and AT&T-TimeWarner (now WarnerMedia).