Shares of CBS fell 0.2% to $48.81, while Viacom fell 3.2% to $29.03.
Viacom shareholders will receive just above 0.595 CBS shares for each share they own, the sources said, adding that the final terms could still change. One source said the range was between 0.5960 and 0.5965.
"It is smart on CBS's part not to pay any premium for Viacom as it does very little to help CBS," said Craig Huber of Huber Research Partners. "Viacom stock already has premium priced in its stock."
Bob Bakish, Chief Executive of Viacom, is expected to be named the Chief Executive of the combined company; Joe Ianniello, interim CEO of CBS, is expected to be named CEO and Chairman of CBS Networks, a source familiar with the matter said. Ianniello's purview would exclude Showtime and publisher Simon & Schuster.
The deal, which could be announced as early as Monday, will reunite CBS and Viacom, bringing together the CBS television networks, cable network Showtime, and book publisher Simon & Schuster with MTV networks, Nickelodeon and the Paramount movie studio.
Consumers should expect the combined company to build out its existing subscription and free streaming video businesses, such as CBS All Access and Viacom's Pluto TV, as it seeks to find its place in the rapidly consolidating media universe.
The two companies are controlled by National Amusements Inc, the holding company owned by billionaire Sumner Redstone and his daughter Shari.
Sumner Redstone split the company in 2006, aiming to unlock the value of the once fast-growing cable networks business in Viacom from the cash generating television business in CBS, while resolving the management issue of who would take over the company.
But in an era of cord-cutting and the rise of subscription video services such as Netflix, CBS and Viacom are now considered too small to compete against the likes of Walt Disney Co, which is launching a streaming video service later this year, AT&T Inc, which will also launch a new service by early next year, and bigger tech companies including Apple Inc and Amazon.com Inc.
This is CBS's third attempt since 2016 to bring the U.S. entertainment companies together. Previous merger talks had failed because of clashes between executives over divvying up top jobs and the companies' relative valuation.
(Additional reporting by Supantha Mukherjee in Bengaluru; Editing by Anil D'Silva and Nick Zieminski)
By Kenneth Li and Greg Roumeliotis