Viacom saga is Wall Street’s new hit show

August 19, 2016

The author is a Reuters Breakingviews columnist. The opinions expressed are her own. 

Sumner Redstone’s Viacom saga is about to become Wall Street’s favorite new show. The nonagenarian mogul who controls the media company has managed to oust long-time Chief Executive Philippe Dauman. It paves the way for Redstone to try and revive the ailing conglomerate. That’ll have investment bankers lining up outside Viacom’s Times Square headquarters for a seat.

Viacom is about to settle with Dauman, Reuters reported on Thursday. He had sued National Amusements, the Redstone family vehicle that controls the company, after he was kicked off its board. Dauman’s exit will mean new directors including BuzzFeed Chairman Kenneth Lerer and former Sony Entertainment President Nicole Seligman can roll up their sleeves and get work.

It is likely to be a long slog. Under Dauman’s 10 year tenure at the helm Viacom has floundered. Many of Viacom’s shows are old and tired. The once cutting-edge cable network MTV has not scored a hit since “Jersey Shore’s” heyday five years ago. Comedy Central stars Jon Stewart, Stephen Colbert and John Oliver have fled for greener media pastures.

Viacom’s share price reflects the problems well. When it split from CBS a decade ago, it was supposed to be a better bet than its less-glitzy stable mate. But its stock has edged up just 3 percent since then. CBS shareholders, meanwhile, have doubled their money.

One option the company now has is to funnel more money than the estimated $4 billion it is spending this year on programming to kick-start new TV shows and movies. That may require borrowing money.

Viacom could also sell some or even all of its cable properties to willing buyers. One of Dauman’s last acts may be to persuade the board to sell Paramount Pictures, perhaps to a Chinese buyer like Dalian Wanda. There’s even a chance that Viacom and CBS join forces once again.

No matter what Viacom decides to do, though, it will need Wall Street’s help, whether to raise money or for M&A advice. Bankers are already getting the popcorn ready.

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