Viacom (VIAB): Restructuring Paramount Might Be The Missing Link - Stifel
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Stifel analyst, Benjamin Mogil, reiterated his Buy rating on shares of Viacom (NASDAQ: VIAB) and believes that a partial sale of Paramount would make a merger more palatable to CBS.
Paramount's investment over the last few years has been relatively stagnant while its peers have shown a greater willingness to invest. The analyst stated "one of the major stumbling blocks for CBS in a merger would be taking on all of Paramount given both the deterioration of the franchise and at the same time having the albatross of having to generate performance to validate not accepting a minority bid which was speculated in the $7-9bn range. With Paramount needing a significant reboot in terms of expanding its slate, CBS' concerns are likely focused on being stretched thin both managerial wise and capital wise given the challenges at both Viacom's cable channels and Paramount"
Essentially, if Paramount sold a chunk of the company and used the proceeds to make a smaller and more profitable entity, it would be more appealing for Disney to recombine.
No change to the price target of $49.
Shares of Viacom closed at $39.54 yesterday.
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