Market Overview

Will Viacom Sell Some Of Its 24 Networks To Reinvest In MTV, Paramount Films?

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Will Viacom Sell Some Of Its 24 Networks To Reinvest In MTV, Paramount Films?

Media giant Viacom, Inc. (NASDAQ: VIAB) will release its first-quarter earnings before the market opens on Thursday. Consensus estimates stand at $3.18 billion in revenues with EPS expected to come in at $0.83. Loop Capital has raised its price target on Viacom to $38 from $37 and maintains a Hold rating.

Loop Capital is expected an EBITDA loss at Viacom’s Paramount unit due to underperformance from Brad Pitt’s WWII thriller "Allied." A recent financing deal with Shanghai Film Group has been announced with Paramount, allowing the film studio to increase its output from 8–10 films per year to a more efficient 15–17.

Will Viacom Sell Networks?

Analysts believe that the numbers will be an afterthought on the earnings release however, instead placing increased emphasis on strategic initiatives regarding Viacom selling some of its networks. In a previous note, Loop Capital suggested that Viacom simply had too many networks, 24 in all.

“Trimming that number down, and then using the cash to reinvigorate the brands that still carry VIAB’s income statement would in our view get investors a little more excited,” said Loop Capital analyst David W. Miller.

Viacom’s Strongest Brands

  • Nickelodeon.
  • Nick Jr.
  • MTV.
  • BET.
  • Comedy Central.
  • Spike TV.
  • Paramount film studio.

An auction sale of Viacom’s lesser known brands, including Logo, TMF, CMT, TV Land and VH-1 could raise as much as $4.8 billion pre-tax.

Another element of the company’s strategic iniatives would involve a doubling down on the strong networks internationally, particularly expanding Comedy Central and Paramount in under penetrated markets including Central Europe, the Middle East, Russia and much of Southeast Asia.

While Viacom has been facing subscriber loses in the United States due to “cord cutting and cord shaving,” this phenomenon has not been occurring Viacom’s mature international markets. Television’s strength internationally has led Discovery Communications Inc. (NASDAQ: DISCA) to use its M&A firepower on international deals for SBS Networks and Eurosport.

Posted-In: Allied Brad Pitt Loop Capital MTV Paramount Shanghai Film GroupNews Media Best of Benzinga

 

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