Viacom in a Much Better Position for the Future
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Viacom's Fortunes Set to Improve
Media firm Viacom ($VIA) has new leadership and is in the process of having a marked improvement in fortune. But it's available for $12 billion, making it cheaper and more attractive than CBS Corporation ($CBS), Viacom's sister company. Viacom is now in a much better position to get itself turned around than two years back, says Jennifer Saba of Reuters in this Nasdaq article. If you remember, the initiative to get the board revamped and the management changed was led by Shari Redstone back in 2016 when its share price sunk by over 50% from its 2014 high.
Bob Bakish is the boss now, and he has had firm plans for bringing about improvements. Viacom has a firm belief that the domestic affiliate revenues it is earning would go through a slight rise in the three months that end in September following three consecutive quarters of experiencing year-over-year declines. Much of this is fuelled by the American cable distributor's carrying networks such as Comedy Central. With movies such as the latest in the "Mission Impossible" series and "A Quiet Place", Viacom subsidiary Paramount Pictures is getting out of its rut. Viacom also has assets overseas that contribute to almost 20% of its top line.
For All Its Growth Potential, Viacom Stock Still Valued Low
Still, Viacom stock is valued quite low. It is now valued for the coming 12 months at around seven times estimated earnings while Discovery is valued at over nine times its estimated earnings. And, Discovery has a similar profile to Viacom. With such uplift, Viacom could add $4 billion to its valuation.
Saba believes that Viacom could potentially have more suitors than CBS since the latter trades at close to 10 times estimated earnings. Viacom is quite attractive, with its own movie studio. The fact that it doesn't have its own broadcast station in the US saves itself some massive red tape headache. These make Viacom more attractive than CBS for a potential takeover by Walt Disney, Fox or Comcast. There are also reports that Viacom and CBS could potentially merge, with the main guy blocking it, former CEO Les Moonves, now out of the way.
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