(Reuters) – Viacom Inc’s bitter contract renewal talks with AT&T Inc’s DirecTV that could see the blackout of MTV, Nickelodeon and Comedy Central by midnight Friday are weighing on a possible tie-up of CBS and Viacom, sources familiar with the discussions said.

Although the boards of CBS and Viacom have not discussed or decided on pursuing a merger, these sources say they are studying AT&T’s impact on Viacom and how it affects the company’s motivation to pursue a CBS merger. Viacom needs to resolve the AT&T contract before considering any other strategic moves including mergers and acquisitions, sources said.

Both companies are controlled by the Redstone family’s National Amusements Inc, which pushed for a merger last year but backed off as CBS explores other options before deciding on another run at Viacom.

Viacom would take a substantial financial hit without an AT&T deal. AT&T is Viacom’s largest distributor, representing 24.5 million total video subscribers, and was responsible for about 15 percent of Viacom’s 2018 revenue. At stake are about $2 billion annually in fees and advertising, which are seen declining in any new deal, according to Wall Street estimates.

The 2017 Viacom and Charter Communications Inc renewal resulted in a 15 percent rate decrease. A similar outcome with AT&T could lead to a $156 million drop in annual affiliate fees paid by AT&T to Viacom, although some analysts have estimated an approximate 10 percent decrease this time.

Viacom and AT&T declined to comment. Negotiations continued as of Friday afternoon, sources said.

Failure to reach a deal is seen emboldening CBS and Viacom’s controlling shareholder’s position to put the companies together to give them better leverage in future distribution contract talks.

“Viacom’s clear need for greater negotiating leverage after being dropped by AT&T might be the final factor necessary to drive the long-speculated CBS-Viacom merger given the common control of both companies by the Redstone-controlled National Amusements,” Credit Suisse analyst Doug Mitchelson said in a research note this week.

If AT&T and Viacom walk away from the table, the No. 2 U.S. telecoms company’s position could also be weakened, especially if it faces a combined CBS and Viacom by the end of June, when CBS’s contract with AT&T expires.

Dropping the CBS broadcast network and NFL games would be disastrous to AT&T, and they may end up paying more for Viacom channels through CBS, analysts have said.

Losing Viacom will also weaken AT&T’s leverage as it faces Walt Disney Co later this year, according to Mitchelson.

Shares of Viacom closed down 2.46 percent at $25.34 on Friday while AT&T shares closed flat at $31.07.