CBS Corp. Chief Executive Leslie Moonves said in response to a shareholder question on Friday that he believed shares of Viacom Inc., which the network considered merging with last year, were undervalued.

Asked at the annual CBS shareholder meeting in New York if it would revisit a merger with Viacom, Lawrence Tu, senior executive vice president and chief legal officer, said CBS was focusing on its current strategy that includes diversifying its revenue stream.

Shares of Viacom rose $1.22, or 3.6 percent, to $35.20 late Friday afternoon. Shares of CBS rose $1.37, or 2.3 percent, to $61.75.

Some Wall Street analysts anticipate consolidation in the media industry as growing numbers of television viewers cancel cable subscriptions to watch shows online, and the advertising market slows.

National Amusements Inc, the privately held movie theater company through which media mogul Sumner Redstone and his daughter Shari control the majority of voting shares of CBS and Viacom, last year proposed that the two companies consider merging.

They called off the effort in December after the two sides could not come to an agreement on Viacom's valuation..

Since then, CBS shares have fallen nearly 3.5 percent, and Viacom has dropped 12 percent. Viacom trades at a lower price-to-earnings multiple than its peers.

"If VIAB shares (or earnings) continue to decline due to accelerated cord-cutting, we wouldn't be surprised to see CBS+VIAB vol. 2," Steven Cahall, an analyst at RBC Capital Markets, wrote in a note on Friday.

In opening remarks at the meeting, where shareholders re-elected all of the company's directors, Moonves thanked Redstone, whom the company said was listening by phone, for his advice and friendship over the years.

Redstone, 93, on Friday officially gave up his voting role on the CBS board, remaining chairman emeritus.

"Everyone at CBS owes his thanks to Sumner for everything he has done for this company," said Moonves, also thanking Shari Redstone, who is vice chair of CBS.

The company also announced on Friday that its board approved a quarterly dividend of $.18 per share, payable on July 1 to shareholders of record on June 9.