CBS Q4 adj. EPS $1.50 vs. expectations $1.53

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These media companies would be ‘less bad’ acquisitions for CBS than Viacom, says Bernstein

Bernstein analyst Todd Juenger wrote in a Friday note to clients that while many media investors seem to view a CBS Corp. merger with Viacom Inc. as inevitable, he thinks that such a deal wouldn’t make sense. “The case for CBS to acquire Viacom, as we understand it, is predicated on pursuing two things: scale and synergies,” he wrote. “We think the scale is in the wrong assets/businesses, and the synergies could be obtained with any other acquisition target, they are not unique to Viacom.” Juenger argued that CBS shouldn’t pursue a cable-network merger at all, but he sees several companies that make better targets than Viacom, in his view, if the company is determined to make a deal. Discovery Communications Inc. would present opportunities for advertising synergies, he said, because its programming appeals to similar demographics as CBS’s own content does. And AMC Networks Inc. makes for a cheaper target that would add “distinctive” programming to CBS’s syndication library, he wrote. “To be clear, we’re not advocating CBS pursue Discovery or AMC Networks, either,” Juenger said. “We’re just saying if against our better judgment they feel they really need to acquire such an asset, Discovery or AMC Networks would be less bad than Viacom.” CBS shares are down 0.7% in Friday morning trading, while Viacom shares are up 0.4%, AMC Networks shares are up 1.6%, and Discovery’s stock is up 0.9%. CBS’s stock has dropped 10% over the past three months, while the S&P 500 has fallen 1.5%.

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