NEW YORK (TheStreet) -- Theater company National Amusements, the controlling shareholder of both CBS (CBS) - Get Report and Viacom (VIAB), will call on the two media companies to merge with each other, Reuters reports.
CBS and Viacom split in 2006, with CBS maintaining the network television business and Viacom taking control of the film production business and a bundle of cable channels, including MTV and Comedy Central.
Nomura Securities Analyst Anthony DiClemente told CNBC's "Halftime Report" Wednesday that a merger may be a matter of survival for Viacom.
"If you're Viacom, you're looking for any port in the storm. If you're Viacom - lieutenants at that company -- you're looking for somebody to save your future," he said. "CBS is perhaps that person, because once you put all those assets together, it does give you the benefit of scale."
Viacom has been hit hard amid falling ratings, a rise in cord-cutting from cable television and a very public struggle for control of the company. Viacom CEO Philippe Dauman resigned on Aug. 20 after a long dispute with Shari Redstone, the daughter of National Amusements owner Sumner Redstone. His replacement, Tom Dooley, will leave the company in November.
CBS CEO Les Moonves won't be forced into a merger, DiClemente opined.
"CBS shareholders own CBS in part because it can be more nimble. It's one must-have network versus Viacom, which has a host of networks that have questionable value and questionable terminal value over the long term," DiClemente said. "If you're Les Moonves, you can't do this deal unless it is financially accretive on a valuation basis for CBS shareholders and unless you have a strategic plan in place to turn around these Viacom assets."
Shares of CBS and Viacom were both higher in Wednesday afternoon trading.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate CBS CORP as a Buy with a ratings score of B. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, revenue growth, notable return on equity and expanding profit margins. We feel its strengths outweigh the fact that the company shows weak operating cash flow.
You can view the full analysis from the report here: CBS