Viacom Stock Drops as CBS Backs Away From Merger Talks

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.

Also Read: Viacom CEO Calls MTV US Strategy a 'Mistake'

“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.

Also Read: Viacom Misses Q4 Revenue Target as Box Office Drops 55 Percent

“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.

Golden Parachutes: See How Much These 10 Execs Got Paid to Leave (Photos)

Philippe Dauman, Marissa Mayer and Michael Ovitz are among a handful of entertainment and tech executives who were handed handsome sums of money while they were being forced out the door. (Please note: All totals are from SEC filings and other official sources.)
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Name: Philippe Dauman
Company: Viacom
Payday: $72 million
Sumner Redstone's former protege -- and for years, one of America's highest-paid CEOs -- took home $72 million as part of a settlement that will see him depart the embattled media company in September.
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Name: Roger Ailes
Company: Fox News
Payday: $40 million
Ailes left the news network he essentially built after a lawsuit filed by a former Fox News anchorwoman led to an investigation, and several other women coming forward accusing Ailes of sexual assault. Ailes resigned two weeks after the lawsuit was filed and received $40 million.
Fox News
Name: Michael Ovitz
Company: The Walt Disney Company
Payday: $140 million
Not a CEO, the co-founder of Creative Artists Agency made $140 million in less than a year's work as the executive president of Disney, when he was fired by then-CEO Michael Eisner, triggering a severance package that was built into his deal -- and which Disney shareholders unsuccessfully tried to have returned in court.
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Name: Carly Fiorina
Company: Hewlett-Packard
Payday: $21 million
The former Republican presidential candidate -- and Ted Cruz's presumptive running mate -- pocketed $21 million when she was forced to resign after orchestrating a disastrous acquisition of Compaq.
Fox News
Name: Marissa Mayer
Company: Yahoo
Payday: $55 million
Mayer hasn't yet committed to leaving, but she's widely expected to depart the top job after Yahoo agreed to be purchased by Verizon for $4.8 billion. Mayer is guaranteed $55 million in severance if she loses her job or if there is a change in control.
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Name: Henrique de Castro
Company: Yahoo
Payday: $58 billion
It turns out there is actually a good time to get fired: Mayer canned de Castro, Yahoo's chief operating officer, in 2014, but his heavily stock-based severance package was worth a robust $58 million, as Yahoo's stock had swelled at the time due to its ownership interest in Chinese e-commerce giant Alibaba.
YouTube
Name: Tom Freston
Company: Viacom
Payday: $85 million
Freston, Dauman's precedessor and the man who essentially built MTV, was fired by Redstone in 2006. One of the biggest reasons: his failure to buy MySpace, which News Corp. eventually sold in 2011 for a $545 million loss.
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Name: Rob Marcus
Company: Time Warner Cable
Payday: $93 million
Time Warner Cable was acquired by Charter Communications earlier this year, making his CEO job redundant. Marcus walked away with nearly $100 million after two-and-a-half years of work.
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Name: Jack Welch
Company: General Electric
Payday: $417 million
GE's pugnacious boss scored the granddaddy of all severance packages, walking away with a monster deal that only became public during a divorce settlement that mandated the disclosure of his retirement benefits.
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Name: Amy Pascal
Company: Sony
Payday: Four-year production deal, valued at $40 million
Pascal, whose personal emails were exposed as a result of the Sony hack landing her in hot water regarding references to President Obama -- was fired as co-chair of Sony's film division in the wake of the scandal. She got a production deal -- not uncommon for high-level studio execs -- that has her attached to some of the studio's biggest franchises, including "Spider-Man" and "Ghostbusters."
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Philippe Dauman is the second consecutive Viacom CEO to walk away with a monster severance package

Philippe Dauman, Marissa Mayer and Michael Ovitz are among a handful of entertainment and tech executives who were handed handsome sums of money while they were being forced out the door. (Please note: All totals are from SEC filings and other official sources.)

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Golden Parachutes: See How Much These 10 Execs Got Paid to Leave (Photos)

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