The CBS board has decided the company needs to get bigger, but merging with Viacom is not enough for Shari Redstone, who has voting control of both companies, according to people familiar with the matter.
If the CBS-Viacom deal gets done, Redstone's National Amusements would like to move quickly with a second deal, the people said. Discovery Communications is interested in selling to CBS or a combined CBS-Viacom, according to two people familiar with the matter. Redstone is open to the idea, but would also consider buying other companies, including Sony Pictures and MGM, according to people familiar with her thinking.
No talks have taken place between CBS and Discovery, said the people, who asked not to be identified because the company's plans are private. But bankers have already pitched Discovery on merging with CBS, one of the people said. Discovery CEO David Zaslav, who extended his contract with his company in July through 2023, would be interested in eventually running a combined company with CBS, according to a person familiar with the situation. Zaslav has also spoken about selling Discovery to other companies in recent years, including Comcast, said another person.
CBS plans to discuss merger options at a board meeting on Thursday. The board will listen to its bankers as they present a variety of merger options, though step one is expected to be a deal with Viacom, two of the people said.
Spokespeople at Discovery and CBS declined to comment.
It's imperative for CBS to get bigger quickly so it has the balance sheet capacity to compete for National Football League broadcast rights, which it owns through the 2022 season. Renegotiation discussions for those rights typically take place about a year before expiration of the agreement. While CBS believes its long-standing relationship with the NFL will help cement a new deal, the company also realizes it needs to have the financial capacity to compete against enormous technology companies such as Amazon for the rights.