Just hours after its controlling shareholder asked it to cease merger talks with CBS and threw support to its acting CEO, Viacom made it official, with its board saying it has discontinued exploring the merger and naming Bob Bakish its permanent CEO.
Viacom said it has dissolved the special committee that was tasked with evaluating a a possible CBS merger. Bakish’s appointment as president and CEO and as a member of Viacom’s board of directors is effective immediately.
Viacom named Bakish acting CEO on Nov. 15, the end of a whirlwind period that saw the resignation of embattled CEO Philippe Dauman and the abbreviated tenure of his former lieutenant Tom Dooley.
Viacom’s controlling shareholder National Amusements – it owns 80% of the programmer’s voting interest – requested that it look into recombining with CBS – in which NAI also owns 80% voting control – back in November. CBS and Viacom split in 2006 in an effort to unlock the value of the broadcaster.
Rejoining the two companies had been thought by some as an effort to enhance the value of Viacom, which had fallen on hard times as low ratings and a declining ad market had impacted the youth-oriented programmer.
Bakish, a long-time Viacom executive – he joined the company in 1997 and was most recently CEO of its international unit – had initially been expected to stay in the CEO seat until a more high-profile replacement could be found. But he apparently took the job a lot more seriously – at the UBS Media & Communications conference last week he mapped out a plan that included being more collaborative on the creative side and improving MTV’s rating performance by March.
That apparently impressed the Redstones and the board.
“I am very excited by the strategy Viacom is pursuing under Bob’s leadership, as well as the relentless hard work and passion he has demonstrated not only in his fast start at the helm but in his many years at the company,” Viacom vice chair Shari Redstone said in a statement. “While there is much work to do, I firmly believe that Viacom has a bright future, and that confidence is underpinned by senior management’s commitment to innovation and a more coordinated, global approach to managing our brands.”
While Bakish is getting a vote of confidence, some reports said that Viacom and NAI pulled the plug on the merger after CBS chairman and CEO Les Moonves reportedly demanded that he get voting control of the combined company, which the Redstones were unwilling to do.
Moonves has said repeatedly that CBS will thrive and survive with or without a Viacom deal.
According to a report in the New York Post, CBS could pursue deals with Sony Entertainment or Verizon as vertical integration deals have gained favor in the wake of AT&T’s $108.7 billion proposal to buy Time Warner Inc.
Viacom stock, down about 6% this morning, continued to slide throughout the day and closed at $34.99 each (down 9.4%, or $3.66 per share). CBS fared better, closing at $62.18 each, down 38 cents, or less than1% per share.
“I am honored to be chosen by the Board to lead Viacom, its world-class brands and exceedingly talented people,” Bakish said in a statement. “I believe unequivocally in this company and its potential to create new opportunities and drive greater value as our business evolves and our industry transforms. We've been working very quickly to mobilize the organization, reenergize our culture and address our areas of greatest need. I look forward to continuing to work closely with the Board and our team to build on this momentum, and will share more on our plan and path forward in the New Year.”