Viacom stock dropped 5 percent in pre-market trading Monday on news that the boards of CBS and Viacom had suspended merger talks.
National Amusements Inc., majority owner of both companies, announced the move — a reversal from a request to the two media conglomerates’ boards in September to explore “a potential combination.”
“We believed that given the industry landscape, a merger might redound to the benefit of both companies and their shareholders,” National Amusements CEO Sumner Redstone and president Shari Redstone said in a joint statement.
“Over the past few months, after careful assessment and meetings with the leadership of both companies, we have concluded that this is not the right time to merge the companies,” they added. “Following the management changes that the Viacom Board put in place, we have been very impressed with the forward-looking thinking and strategic plan being pursued under Bob Bakish’s leadership.”
Bakish was named Viacom’s acting president and CEO in October following the forced resignation of Philippe Dauman, who had publicly clashed with the Redstones over the direction of the media giant.
The company’s stock price has basically halved since its height two years ago in the midst of troubled performance by cable networks like MTV and Comedy Central as well as the Paramount movie studio.
“We know Viacom has tremendous assets that are currently undervalued, and we are confident that with this new strong management team, the value of these assets can be unleashed,” the Redstone statement continued. “At the same time, CBS continues to perform exceptionally well under Les Moonves, and we have every reason to believe that momentum will continue on a stand-alone basis.
“Based on our assessment of the strengths, progress, and future prospects of both companies, we are requesting that the boards discontinue their discussions at this time and focus instead on their independent paths forward.”
While Viacom stock took a hit in pre-market trading, to $36.52 per share, CBS stock remained flat at $62.56.