George Mannes

Viacom Fans Eagerly Eye the Future

 

Another, he says, was the uncertainty over the fate of Karmazin, who announced his resignation this month in the wake of longstanding chatter that he was clashing with CEO Sumner Redstone.

"I'm not thrilled that he left," said the investor, "but the fact that he might leave was an overhang on the stock."

Also hurting Viacom has been the performance of the radio business, says the investor, both at Viacom and industrywide.

Last week, a wave of sell-side analysts cut estimates, price targets and ratings in the radio sector, citing various signs of weakness.

Insulated?

The investor himself says he thinks things will get worse among radio stocks before they get better. But, he says, further damage to Viacom -- parent of the Infinity radio chain -- is limited because radio is only one aspect of Viacom's operations, one whose weakness is being offset by success in television, cable and outdoor advertising.

"Now that everybody has capitulated on the radio numbers, what else is there?" says the investor. "There are no more reasons to keep someone from buying the stock."

Another positive catalyst, says the investor, is Redstone's previously stated plans to buy back stock once the Blockbuster deal is completed.

But the investor acknowledges there are threats to his positive outlook.

Radio is still "an overhang," he acknowledges, "but it's a known entity," and it's more than offset by strength in Viacom's other business units. The overall advertising market might take a hit.

There's also, he says, the perennial risk that Viacom might open up its wallet for a major purchase. "The big fear is the sizable acquisition," he says. "And every now and then, the rumor comes out."

But, he says, Viacom isn't likely to do a big deal until its stock trades higher.

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