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Top Wall Street Firms Discuss Viacom's Restructuring

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After the markets closed on Monday, Viacom, Inc. (NASDAQ: VIAB) announced details of a restructuring plan, writing off acquired content, accelerating amortization of reality programs, and streamlining its business operations. These changes reflect the challenges of the media company with consumers switching away from reruns and towards online video streaming.

Shares traded recently at $67.18, down 2 percent.

Wunderlich Securities: Buy rating, $98 price target

"The eventual indicated annual cost savings are $350mm, with $175mm in 2015 benefits. (We had discussed $250mm in net cost savings in a 3.12.15 report from the MTV Networks consolidation into three groups even after aggressive programming initiatives). Coupled with a previously indicated $400mm in strategic acquisitions, Viacom is conservatively suspending share buybacks with resumption no later than this October. This follows $15B in buybacks since October 2010, including $1.5B for H1 F2015. We still believe that MTV Networks has a superior cost template for youth programming creation."

UBS: Neutral rating, $73 price target

"The charges enhance future profitability as unproductive content costs are eliminated and we doubt any investors are unaware of the pressures on the business that led to this action, thus, we expect the news to be viewed favorably. Management suspended the buyback (until no later than October), which should be viewed negatively as it underpins the investment case. Overall, we expect some initial investor consternation, but shares could benefit from higher levels of reported earnings over time, especially when buybacks resume."

Morgan Stanley: Underweight rating, price target is unavailable

"As industry C3 ratings fall 10-15 percent this season, with Viacom's declines falling faster...in Viacom's restructuring there is no silver bullet for success….Viacom will need to continue to invest in content, likely both acquired and originals, so some of the cost savings could be reinvested."

Latest Ratings for VIAB

DateFirmActionFromTo
Oct 2019MaintainsUnderperform
Oct 2019MaintainsEqual-Weight
Sep 2019Initiates Coverage OnUnderperform

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Posted-In: Benjamin Swinburne Doug Mitchelson Matthew Harrigan Meghan Durkin Morgan StanleyAnalyst Color Analyst Ratings Trading Ideas

 

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