• by Wayne Friedman , Staff Writer, February 1, 2019

CBS is looking to get bigger when it comes to potential acquisitions -- beyond its anticipate re-merging with Viacom -- according to a CNBC report. But when or with whom is unclear.

The same story said Discovery Inc might be looking for a CBS connection -- to be bought by CBS.

But in a somewhat rare on-the-record comment in regards to such potential acquisition stories, David Leavy, chief corporate operations officer for Discovery, responded to a TV Watch inquiry:

“The CNBC story is inaccurate. Discovery is not for sale. We remain extremely confident in our growth strategy in the U.S. and globally as we continue to build the leading portfolio of super-fan brands in every market around the world.”  

CBS had no comment.

The twitchy stock market looked to make some hay. Discovery’s stock climbed -- then dropped -- then climbed again, closing up 6%.

The story is focused around considerations by the CBS board, now controlled by board members in line with National Amusements, who have a 79% voting share in the TV company.

Shari Redstone, vice chair of CBS-president of National Amusements, is said to want to pursue other companies, including Sony Pictures Entertainment and/or MGM, according to the story.

What’s weird is that the story talks about Discovery selling itself to CBS. For many investors, that approach might seem a bit quirky.

Companies that look for “strategic alternatives” -- to find a buyer, say -- usually come amidst somewhat public financial troubles. Discovery isn’t in that situation.

Then consider what Discovery said -- on the record: It isn’t interested. Of course, shareholders would have a say, always looking for a bigger pay day for their shares. That said, Discovery's closing price on Thursday ($28.38) was nowhere near its 52-week high, $34.89.

But it may make sense in board terms. CBS wants to gain scale and strength.

However, the typical advantages of having more TV networks is to use as leverage in higher-revenue carriage deals with traditional or virtual pay TV companies, isn’t what it was. Pay TV providers want flexibility -- so do TV consumers, when it comes to TV network options.

In addition, many analysts believe that owning traditional TV companies -- Viacom, Discovery -- isn’t moving the needle forward in the modern TV ecosystem, especially when it comes to the growing and diverse digital media world.

Factor this in: Shari Redstone’s hands are tied -- at least when it comes to a re-merger of CBS and Viacom. A recent deal has been put in place where a merger between the two can’t happen for two years, per an agreement between CBS and National Amusements.

While Discovery’s stock was up 6.1% to close at $28.38; CBS was down, 0.1% to $49.46; and Viacom, 2.8% higher to $29.42.

As with anything in the world of new big media deals, we could use more data points -- or at least a stronger business narrative.