(Reuters) - CBS Corp <CBS.N>, owner of the most-watched U.S. television network, reported results that exceeded Wall Street expectations and said it was still in the early stages of exploring a merger with Viacom Inc <VIAB.O>, a deal favored by its controlling shareholders.

Media mogul Sumner Redstone, who controls both CBS and Viacom through his privately held National Amusements, in September proposed a merger of the two companies, which he split up a decade ago. Both have created special committees to explore a tie-up.

Shari Redstone, Sumner Redstone's daughter, has been in favor of merging CBS and Viacom under the leadership of CBS Chief Executive Leslie Moonves, sources have told Reuters.

On a call to discuss CBS earnings, Moonves told investors contemplation of a Viacom deal is still in the early stages, but added, "if it looks right and is structured properly, it could be an attractive opportunity."

Shares of CBS rose 1.8 percent in post-close trading.

CBS, home to popular shows such as "Homeland" and "The Big Bang Theory" and the Showtime cable network, said revenue rose 4.3 percent to $3.396 billion in the third quarter.

Analysts had expected revenue of $3.34 billion, according to Thomson Reuters I/B/E/S.

However, ad revenue, which accounts for more than 40 percent of total revenue, fell slightly to $1.47 billion. That was the result of limited ad spots during the prime time hours of the Republican and Democratic Party conventions and first presidential debate, as well as competition from the Summer Olympics on NBCUniversal, owned by Comcast Corp <CMCSA.O>.

While CBS executives on the call said they expect fourth-quarter ad revenue to be stronger, they added that CBS relies less on ad revenue than ever before.

The company is working to add NFL games to its All Access online streaming service, for example, Moonves said, noting that the broadcaster is in "active discussions" with the NFL.

CBS plans to begin selling All Access with its Showtime over-the-top service - independent of any cable TV subscription - but is still determining the pricing, Moonves said.

Revenue from CBS's affiliate and subscription fees division rose 13.4 percent to $753 million in the quarter. Revenue from its content licensing and distribution business, one of its fastest growing, rose 6 percent to $1.11 billion.

CBS said net income from continuing operations rose to $514 million, or $1.15 per share, in the three months ended Sept. 30, from $426 million, or 88 cents per share.

Excluding items, CBS earned $1.05 per share, beating the average analyst estimate of 98 cents per share.

(Reporting by Rishika Sadam in Bengaluru and Jessica Toonkel in New York; Editing by Savio D'Souza and Bill Rigby)