CBS/Viacom: Recombination Edges Closer -- Credit Suisse

Assessing value of combination: Following the letter written by controlling shareholder National Amusements Inc. (NAI) asking the boards of CBS and Viacom to consider a potential combination of the companies, we assess the strategic and financial merits of the transaction. We believe a merger would yield substantial near-term cost savings, but may also be the best catalyst for improving Paramount's profitability and for putting in place a much-needed restructuring of Viacom's cable network portfolio. We reiterate our OP ratings on both CBS (OP, $75 target) and VIAB (OP, $42 target), but highlight more upside potential for CBS from current levels