- A merger with Viacom still seems like the most likely outcome for CBS, even if controlling shareholder National Amusements has agreed not to propose a deal for two years.
- While CBS' board decided a deal with Viacom wasn't in the best interest of shareholders earlier this year, there are six new directors (and no Les Moonves) who could alter the company's decision-making.
- A new, external CEO would be the logical choice to run the combined company, according to BTIG analyst Rich Greenfield.
As part of a settlement, NAI agreed not to propose a merger between the companies for at least two years. It also said it would "give good faith consideration" to other transactions with other companies.
Still, an eventual marriage with Viacom could be destiny, for several reasons.
Moonves may not have wanted CBS and Viacom to merge, but the companies "should be together because they're worth 20 to 30 percent more as a combined entity than they are as stand-alones," Bibb said. "Neither one of them can survive in the new media landscape."
A tie-up with Viacom won't happen before CBS gets a new outside CEO, said BTIG analyst Rich Greenfield. That person, instead of current Viacom CEO Bob Bakish, would run the combined company, he said.
Once the board does find a new CEO, either CBS or Viacom can start deal negotiations with each other. It's only NAI that can't push for a merger for two years, according to the settlement agreement.
CBS' special committee decided earlier in the year that a merger with Viacom wasn't in the best interest of CBS shareholders. But CBS' board is now drastically different, with six new members. That could prompt a different outcome if the companies were to restart talks — one that Shari Redstone would certainly champion.
Even a combined CBS-Viacom may not be large enough to survive long term. But there are still a handful of other media companies — Discovery, Lions Gate, AMC Entertainment, MGM — that need scale too. A combination of several of them could be a logical endgame scenario.
Like most media companies, CBS owns a variety of assets, including the CBS TV network, Showtime, a production studio, some digital assets, a stake in the CW network, owned-and-operated local TV stations and some other cable channels.
It's a jewel for a large company that wants content, such as AT&T. CBS owns the rights to highly rated sports such as the National Football League and has consistently been "America's most watched network," leaning on hit shows such as "The Big Bang Theory" and "60 Minutes."
But AT&T just completed its $85 billion deal for Time Warner, and that acquisition is still being appealed by the Department of Justice on antitrust grounds. The Time Warner integration will be priority No. 1 for AT&T -- assuming no further regulatory hurdles.
Comcast loves NBCUniversal, but there's no way regulators would allow a company to own both CBS and NBC.
Disney is similarly out as an acquirer, as it owns ABC. Plus Disney just bought the bulk of Fox's assets and will need to integrate those first. The new Fox will also be subscale but again won't be able to put CBS and Fox under the same ownership.
Regulators won't allow a foreign buyer to control CBS.
Charter Communications, the second-largest U.S. cable company, doesn't own a media entity and could be a buyer, but CEO Tom Rutledge has expressed more interest in buying other cable companies, should they come available, rather than spending big bucks on content.
Technology companies still haven't taken the plunge to own content. Netflix's entire strategy is predicated on putting media companies like Showtime out of business, and Netflix is consciously staying away from live programming.
Amazon, Apple or Google all have the money to buy CBS, but all three companies have had opportunities to purchase legacy media in the past and all have passed. According to Greenfield, that suggests they're looking to follow Netflix's plan to build internally rather than buy externally.
"We simply do not see a buyer for CBS beyond Viacom, which is why it would make sense for CBS to proactively propose a Viacom transaction sooner than later as scale is becoming increasingly critical in the media industry," Greenfield wrote in a note to clients.
Even if another company decides its best strategic move is to acquire CBS, there will be liability associated with inevitable class-action lawsuits related to the sexual harassment charges against Moonves and the lack of action from the board, Bibb said.
But shareholders claiming losses won't have much of a case because CBS shares haven't fallen much since Ronan Farrow published two articles with allegations against Moonves, said John Coffee, a law professor and director of the Center on Corporate Governance at Columbia Law School.
A standard shareholder lawsuit claiming losses involves a one or two day drop of at least 20 to 25 percent of value, Coffee said. That never happened with CBS.
While a buyer could negotiate protections that would absolve itself from liability, National Amusements may be more willing to transact with an outside buyer after NAI Chairman Sumner Redstone dies. The Wall Street Journal reported Sunday that NAI has agreed to amend the trust that prohibits any merger that leaves NAI with less than 30 percent of the voting control of the resulting business — but only after Redstone dies or is deemed incapacitated. And if that doesn't happen in two years, NAI is free, once again, to push for a deal.
Disclosure: Comcast is the owner of NBCUniversal, parent company of CNBC and CNBC.com.