If Les Moonves Exits CBS, What Happens to His Crusade Against the Viacom Merger?

And is his likely successor, Joe Ianiello, ready for primetime?

CBS chief Les Moonves seems poised to exit the media giant he’s led for 15 years — which raises questions about what will happen to the CBS-Viacom merger he has fought to stop.

The CBS board of directors has been in talks about Moonves’ future at the company, and the size of his severance package if he exits. News of his potential ouster comes as the company tries to settle a legal dispute with majority owner Shari Redstone, and amid an investigation of sexual misconduct accusations that six women have lodged against Moonves.

Analysts who spoke with TheWrap were split on whether removing Moonves, the main obstacle to the merger, would clear the way.

National Amusements, the Redstone family company her father Sumner Redstone turned into a media powerhouse, has a controlling stake in both CBS and Viacom. As CNBC’s David Faber noted, the company’s desire to re-merge CBS with Viacom could be a sticking point in the exit settlement with Moonves.

As TheWrap previously reported, Moonves’ contract calls for $180 million in severance, plus a production deal. But Faber reported that the board is currently offering him a package worth roughly $100 million, which would mostly consist of company stock.

“[CBS is] going to make sure that if they get rid of Moonves, [Redstone] can’t exercise her voting control of support for the merger for two years,” Laura Martin, Needham & Co. analyst, told TheWrap. “I think if National Amusements pushes a merger with Viacom they will get sued, because no other shareholder wants those two companies to merge, from clients we’ve talked to.”

What’s more, Martin believes COO Joe Ianiello — the executive in line to take the reins at CBS — would sustain the network’s success under Moonves.

“Joe Ianiello is respected by Wall Street — highly respected by Wall Street,” Martin said. “He’s an excellent executive. He’s really good at setting budgets, delivering what he promises, and a good negotiator.” That sentiment was shared by a person with direct knowledge of the negotiations, who believes an external search would only highlight Ianiello’s strengths.

CFRA analyst Tuna Amobi, who believes Moonves exiting could very well mean Viacom merger talks rekindle, told TheWrap he didn’t think Ianiello would remain CEO of the company if the two companies ultimately merge.

“I don’t think he’d be anointed for the long term,” Amobi said. “If Les were to leave, I think it’s fair to assume that [Viacom CEO] Bob Bakish would be the preferred choice in a combined company, having run a public company before.”

What makes for an even more complicated web is that the CBS board is in the middle of two separate talks, one with Moonves and another to settle a legal dispute against Shari Redstone and National Amusements.

In May, CBS filed a suit against Redstone and National Amusements, which controls roughly 80 percent of the voting power in CBS. Led by Moonves, the company argued that Redstone had shirked her duty to shareholders by pushing for a merger with Viacom, which CBS saw as potentially harmful to the value of the company. Moonves and CBS also laid out a plan to issue dividends that would dilute Redstone’s control of the company altogether.

Redstone, through National Amusements, has long held a desire to re-merge the companies. However, Redstone said in a court filing in May that she had cooled on the idea of merging CBS and Viacom, which she had been pushing since 2016. In the filing, National Amusements said it began questioning the validity of the merger as Moonves continued to display his reluctance and CBS insiders began disparaging Viacom. Redstone said she told the Viacom board she no longer supported the merger.

National Amusements and the CBS board of directors have been in talks for weeks, trying to reach a settlement in their messy, public legal dispute over control of CBS. The two sides would like to avoid heading to trial, which is currently scheduled to begin Oct. 3, according to an individual familiar with the talks. Members of the CBS board and representatives for National Amusements met over Labor Day weekend.

A person with direct knowledge of the situation told TheWrap that one resolution might involve Redstone agreeing to hold off on a CBS-Viacom merger for now. Two other individuals with knowledge of the talks agreed that if a CBS-Viacom merger wouldn’t maximize shareholder value with Moonves as the CEO, it still wouldn’t without him.

But even if any settlement includes a moratorium on any Viacom merger, that doesn’t mean a deal is off the table entirely.

“We see no evidence that potentially new CBS management will be empowered to act independently to sell this company to the highest external bidder,” wrote Michael Nathanson and Craig Moffett of MoffettNathanson, in a research note on Thursday. They argued this will also hamper CBS’ stock price, because “the market expects a new board and new CEO to ultimately bend to the will of National Amusement and combine Viacom and CBS.”

Rich Greenfield, an analyst for BTIG, argues that on merit, the recombination of the two makes sense.

“We continue to believe the logic from combining Viacom and CBS is compelling, and not just for cost-savings alone,” Greenfield wrote in a research note on Thursday. “We foresee significant revenue synergies, not to mention greater scale would enable the combined Viacom/CBS to make meaningful acquisitions that are needed to compete in a world of giants (think AT&T Time Warner and Disney/Fox, let alone Google, Facebook, Amazon, Apple, etc).”

He added that any merger talks probably couldn’t happen until next year, noting that “significant changes need to occur over the next several months.” He also added that, even though the moratorium on Viacom talks would potentially free up the CBS board to look at other possible deals (withVerizon, for example), it wouldn’t hold much weight if National Amusements is still the controlling owner.

“As the controlling shareholder of CBS (and Viacom), the ultimate decision on pursuing a potential transaction lies with National Amusements and the NAI Board of Directors, not CBS and its own Board of Directors,” he wrote. “We also believe the CBS Board will ultimately be comprised of a majority of independent Directors appointed by National Amusements, which makes this entire issue a moot point over the coming weeks/months.”

Amobi, like Greenfield, suggested this could likely change were Moonves to leave and the litigation to become moot.

“It could for sure be resuscitated in the event that Moonves leaves — and it’s not far-fetched to think there’d be a board overhaul,” Amobi said. “The strategic rationale for the merger would seem just as valuable to Shari as it did just a few months ago.”

Sean Burch contributed to this reporting