Viacom has asked CBS to sweeten its merger bid by about $2.8 billion or almost a quarter more than CBS’s offer, people familiar with the matter said, indicating the wide gap in the U.S. media firms’ price expectations.
National Amusements, the Redstone family company that controls CBS and Viacom, has pushed the two sides to negotiate a merger by forming independent board committees. Viacom’s request shows how the companies have yet to make progress in their talks.
In a letter to CBS delivered Thursday night, Viacom asked for 0.68 CBS shares for each Viacom class B share, the sources said. the counteroffer gives Viacom holders a 41.5 percent stake. CBS had offered 0.55 of its shares for each Viacom class B share.
CBS is now considering its next steps in the deal negotiations, said the sources, who asked not to be identified because Viacom’s request is confidential. It has not responded to the counteroffer.
CBS and Viacom declined to comment.
Viacom announced Monday it is moving its earnings release up a few days to April 25.
At CBS’s proposed share exchange ratio of 0.55, Viacom would be valued at $11.9 billion, below its current market capitalization of $12.7 billion. Viacom’s counterproposal values the company at $14.7 billion.
Viacom shares have risen about a third since early November on speculation of new efforts to merge CBS with Viacom, after the previous round of negotiations in 2016 ended unsuccessfully.
In its letter to CBS last week, Viacom also asked for its CEO Robert Bakish to be president and chief operating officer of the combined company, a demand supported by National Amusements, according to the sources.
CBS has asked for its chief operating officer, Joseph Ianniello, to have that role instead, the sources said.
Both CBS and Viacom agree that CBS CEO Les Moonves should lead the combined company, according to the sources.
The merger would combine CBS’ television network, local TV stations and Showtime cable network with Viacom’s cable networks, including MTV, Comedy Central, and Nickelodeon, as well as Viacom’s Paramount Pictures film studio.
The pressure on the media sector to consolidate has increased following AT&T’s planned $85.4 billion acquisition of Time Warner and Walt Disney’s recent deal to buy some Twenty-First Century Fox’s assets for $52.4 billion.
Combined, CBS and Viacom would have more leverage to negotiate prices for their programming with U.S. cable and satellite companies, which face a decline in their subscriber base amid fierce competition against media streaming companies, such as Netflix. But sources said CBS sees Viacom’s estimated $1 billion in cost synergies to be “way off.”
David Faber contributed reporting