The Hollywood trade paper said executives from both companies spent the weekend hammering out details of a deal that calls for Viacom to buy CBS, most likely for stock. An announcement could come as early as Tuesday, it added.
The deal, which has been the object of speculation in the investment community and news media, raises doubts about the future of Viacom's struggling UPN television network, since recently relaxed federal regulations still prohibit one company from owning two networks, the paper said.
But it quoted sources as saying the deal could be derailed by Viacom chairman Sumner Redstone and CBS chief executive Mel Karmazin, because neither would want want to cede power to the other.
Billionaire Redstone, 76, would probably keep voting control of the new entity via his National Amusements company, while Karmazin, 55, would be his heir apparent, it said.
The paper said a sale would probably not put much, if any, premium on CBS' share price, which has rallied in recent days on merger speculation. Viacom Class A shares closed Friday at 45.31, up 3.13 a share. CBS hit a 52-week high Friday before easing to close at 48.94 a share, up 1.69.
Markets were closed Monday for the Labor Day holiday. Both issues trade on the New York Stock Exchange.
Talks between Viacom and CBS started weeks ago as a simple station deal, triggered by an August 5 vote by the Federal Communications Commission to relax some restrictions on station ownership, Daily Variety said.
CBS owns 15 stations and Viacom 19, with the two groups overlapping in five markets.
Company officials were not available for comment tonight.
In addition to Paramount, MTV--and its sister cable channels VH1, Showtime, and Nickelodeon--Viacom owns the Simon & Schuster publishing house. CBS' interests include the Nashville Network and Country Music Television cable channels, as well as a huge radio station and outdoor advertising group through Karmazin's original company, Infinity Broadcasting, which CBS spun off into a separate, publicly traded company late last year.
Story Copyright © 1999 Reuters Limited. All rights reserved.
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