Viacom buyers appearance past Dauman, having a bet on suitors

Media traders are looking beyond the legal struggle between the Redstone family and Viacom Inc VIABO> CEO Philippe Dauman, speculating that a deal for the $18 billion media conglomerate could be on the horizon.

closing month, Sumner Redstone, 93, the controlling shareholder of Viacom and CBS Corp (CBS.N), changed key individuals of his seven-individual accept as true with that will take over his majority balloting stake of CBS and Viacom whilst he dies or is deemed incapacitated, and he signaled he may additionally disregard the Viacom board and Dauman.

That caused new allegations, this time from Dauman, that the home-certain wealthy person is mentally incompetent. In a preceding lawsuit filed by means of a former Redstone female friend, Dauman testified that Redstone become "engaged" and "alert."

there is no proof that a deal for Viacom is inside the works. nonetheless, investors have bid up stocks of Viacom about 16 percent due to the fact that may additionally 20 when Redstone removed Dauman from the seven-character agree with with a purpose to ultimately control CBS and Viacom.

A Viacom spokesman and a spokesman for Sumner Redstone declined to comment. A spokeswoman for Redstone's daughter, Shari Redstone, declined to remark. Shari Redstone, who sits on her father's trust, adverse Dauman's elevation to Viacom government chair in advance this year.

Dauman is fighting his ouster from the believe in court docket, declaring that Redstone's dwindled intellectual capacity left him vulnerable to his daughter's flawed affect. but many buyers assume he'll depart Viacom.

“I don’t see how he might stick around,” stated Ben Strubel, a fundamental with Lancaster, Pennsylvania-primarily based wealth supervisor Strubel investment management, which owns non-vote casting shares of Viacom.

The thinking amongst traders is that if Dauman leaves, Viacom's fate might be in play.

One situation would be Viacom merging lower back into CBS(CBS.N), 10 years after the agencies cut up, Strubel stated.

“I think Viacom recombined with CBS is the most herbal in shape,” he said.

CBS could have higher bargaining power with vendors, with the brought heft, Strubel and different traders and analysts stated. And some desire that Viacom programing might improve underneath Leslie Moonves, the CBS chief govt who has presided over a a hit technology for the television network.

different investors said they want Viacom placed up for sale in an open auction and believe suitors should include Discovery Communications (DISCA.O), AMC leisure Holdings (AMC.N) and companies that may be interested by moving into programing, such as Apple Inc(AAPL.O), Dish community Corp(DISH.O) and Verizon Communications Inc(VZ.N).

The war over control of Viacom is playing out at a time when the growth of streaming video carriers like Netflix and Amazon is placing pressure on networks and cable organizations to offer smaller, decrease-value applications of channels.

The surroundings leaves Viacom, as a stand-by myself company, little time to drag off a flip-around and improve its ratings and average overall performance, stated Christopher Marangi, a portfolio supervisor for Rye, new york-based totally GAMCO buyers Inc, the second biggest owner of balloting stocks of Viacom after the Redstone family.

"Time is of the essence," Marangi stated in an interview. He declined to touch upon his possibilities for Viacom's future.

GAMCO CEO Mario Gabelli said in an interview in may additionally that he offers Dauman six months to turn the organization round. He declined to mention what would occur if there has been no improvement in that point.

Viacom owns MTV, Nickelodeon, Comedy relevant and the Paramount film studio. stocks within the corporation have fallen almost 50 percentage in the beyond  years despite the most latest uptick. Dauman has told buyers he plans to pay down debt by means of selling a minority stake in Paramount, a circulate that Redstone antagonistic, in line with his spokesman.

On Monday, country wide Amusements, the Redstone own family business that holds its Viacom stake, changed Viacom's bylaws to require unanimous Viacom board assist for any Paramount-associated transaction. A Viacom spokesman stated the bylaw changes have been illegitimate.

BRINGING THE BAND returned collectively

overdue last month, Redstone counseled in a announcement issued through a spokesman that he changed into considering ousting Dauman and Viacom's board [ID:nL2N18O19H], growing hypothesis that he's thinking about merging Viacom lower back into CBS.

Shari Redstone has expressed strong assist for Moonves as CEO and government chair of CBS.

A mixed CBS-Viacom should save extra than $two hundred million in expenses, in keeping with BTIG Analyst Richard Greenfield.

"If matters are going to retain to move into smaller bundles of channels, the quickest way to protect Viacom is for it to merge," Greenfield advised Reuters.

A CBS spokesman declined to remark. Moonves, seen as key to the deal, has no longer said he desires to run the two agencies.

not all CBS shareholders are sure that any such deal makes experience.

"we'd must investigate it more from the side of CBS to ensure they were not investing in a bad deal," Michael Cuggino, president and portfolio supervisor at San Francisco-primarily based everlasting Portfolio own family of price range, which owns voting stocks of CBS and Viacom, informed Reuters.

Salvatore Muoio, predominant with new york-based totally S. Muoio & Co, a prime proprietor of Viacom balloting shares, stated a bidding process for Viacom could recognize the most cost.

Viacom should provide corporations including AMC and Discovery programing and scale to better negotiate for higher expenses from cable and satellite tv for pc vendors, Muoio stated.

Representatives for Verizon, Apple and Discovery declined to remark. E-mails to AMC have been not again.

Absent a deal, Viacom may additionally continue to face skeptical investors, along with John Heinlein, chief executive of Horan Capital management, which offered out of Viacom in may also over what Heinlein referred to as "too many issues confronting the agency."