Viacom to Officially Explore Merger With CBS

Shares of Viacom and CBS trade lower today than they did three years ago.

Viacom and CBS have made their courtship official.

On Thursday, the sister companies, both controlled by Sumner Redstone and his family via their ownership of National Amusements, said they will explore a merger.

Both Viacom and CBS said in regulatory filings that their boards of directors have established special committees of independent directors to evaluate a combination of the companies, which were split from each other 13 years ago.

Shari Redstone has long advocated merging the two back together again, but insiders say CBS CEO Leslie Moonves has balked at the notion. Investors in both companies might be itching for something dramatic to happen, and quickly, as shares of both trade lower today than they did three years ago despite a bullish market for stocks overall.

After the closing bell Thursday, when CBS and Viacom disclosed their intentions, neither stock moved much, suggesting Wall Street has already factored the possibility of a merger into shares of both companies.

"There can be no assurance that this process will result in a transaction or on what terms any transaction may occur," both CBS and Viacom said Thursday.

National Amusements, meanwhile, said it "supports the processes announced by CBS and Viacom to evaluate a combination of the two companies, which we believe has the potential to drive significant, long-term shareholder value."

Viacom and CBS are likely feeling the pressure to grow fast, as Disney will do when it purchases most of 21st Century Fox and as Time Warner will do when it is absorbed by AT&T.

If Viacom were to merge with CBS, the combined company would boast $27 billion in annual revenue, with 40 percent coming from advertising, 30 percent from affiliate fees and 30 percent from content and some smaller segments, UBS analyst John Hodulik said on Thursday.