National Amusement Responds to Potential Paramount Studio Sale by Viacom (VIAB)
NEW YORK (TheStreet) --Reports surfaced that Viacom (VIAB) - Get Report was interested in seeking a deal to sell a 49% stake in its Paramount Studios to a potential Chinese bidder, according to both CNBC's David Faber, and the Wall Street Journal
"The wrestling match is between National Amusements, the controlling threshold of Viacom, and its current board of directors and management," Faber reported on "Squawk on the Street" Friday morning.
Faber then proceeded to read a statement by National Amusement referencing the possible sale.
"Paramount is one of Viacom's most valuable assets, any short term benefits that might result from a Paramount transaction would be outweighed by the severe negative impact on Viacom's future, and strategic flexibility to best capitalize on this important asset," the statement said.
Furthermore, "the complexities of joint ownership of Paramount would undoubtedly extend far beyond that into other divisions of Viacom and limit its options to take on partners. Also, any decision should not be made by individuals who may be leaving the board shortly," the statement continued.
The individuals being made mention to are five of the current board members the company is currently looking to replace, Faber pointed out.
"It certainly would appear that any hopes that management has for getting a deal done for the sale of that 49% stake in Paramount have been dashed, at least according to National Amusement," Faber said.
Viacom responded with its own statement, saying, in part: "It is beyond understanding that National Amusements would continue in its attempts to interfere with a potential transaction that would create a unique opportunity to drive long term value for both Paramount and Viacom."
Shares of Viacom are trading lower 1.58% to $44.09, during trading Friday morning.
Separately, TheStreet Ratings rates Viacom as a "Hold" with a ratings score of a "C+." The primary factors that have impacted TheStreet Ratings are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks.
The company's strengths can be seen in multiple areas, such as its compelling growth in net income, expanding profit margins and notable return on equity. However, as a counter to these strengths, TheStreet Ratings also finds weaknesses including generally higher debt management risk, weak operating cash flow and a generally disappointing performance in the stock itself.
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: VIAB