Analyst Urges Redstone to Take Viacom Private

Stock Down 18% Since Split With CBS

By Published on .

NEW YORK ( -- An analyst with Pali Capital today called for Viacom Chairman Sumner Redstone to take the company private, continuing several weeks of criticism of the company and its current management strategy.
Sumner Redstone
Sumner Redstone Credit: AP

In a report sent out today, the analyst, Richard Greenfield, argues that taking Viacom private would enable the company's chairman, Mr. Redstone, to gain the largest possible return on his investment while enabling Viacom some freedom from the constraints of Wall Street. Even so, Mr. Greenfield maintained his buy rating on the stock.

Stock down 18%
Mr. Greenfield was quoted by The New York Times July 22 saying he thought the Viacom board might need a change of management if the company didn't right itself. The stock is down 18% since Dec. 30, 2005, while former sibling CBS Corp. is up 4%. Other media companies have performed much better than Viacom since then; Walt Disney Co.'s stock is up 22% and News Corp.'s is up 18% (Time Warner's share price is down 7%, however).

CBS Corp. was created Jan. 1, after Viacom decided to split itself in two. The companies began trading separately Jan. 13. CBS Corp. houses broadcast networks (chief among them being CBS) a publishing house, theme-park unit, outdoor and radio businesses, while Viacom is parent to cable networks such as MTV and a film division including Paramount Pictures.

"This is really looking at how undervalued it is," Mr. Greenfield said in an interview today. "Sumner should be buying stock aggressively at these levels." The stock is at $32.83, hovering around its 52-week low of $32.42 on July 18. Mr. Greenfield said Viacom needs to be more aggressive and "have a clearly defined strategic vision that they have to execute against."

'Dear Mr. Redstone'
In the note today, titled "Dear Mr. Redstone: Take Viacom Private -- Reiterate Buy," the analyst said Viacom had become too risk averse. "The more we think about these issues and how Viacom stock continues to underperform the market, the more we think, 'Why isn't Viacom a private company?' Viacom management would then be free to run Viacom how they want, without worrying about public shareholders."

Mr. Greenfield, long one of the most frequently quoted analysts on the media industry, has made headlines in recent weeks with another research note on the company dated July 10, headlined "How Viacom Lost its Mojo: Underlying Value Unchanged."

Viacom reports its second quarter earnings for 2006 on Aug. 9.
In this article: