Newspaper article THE JOURNAL RECORD

Kicking the Tires on Sumner Redstone's Viacom

Newspaper article THE JOURNAL RECORD

Kicking the Tires on Sumner Redstone's Viacom

Article excerpt

NEW YORK -- It's got Beavis and Butt-head. Nick at Nite. Mission Impossible. Yet, Viacom Inc. is stuck in Wall Street's doghouse and some are starting to question the leadership of its legendary chairman, Sumner Redstone.

Viacom, not exactly a household name like its sterling collection of companies -- MTV, Paramount Pictures and Simon & Schuster publishing -- is in the midst of a deep image problem.

Its stock is off about 50 percent from its all-time high in late 1993, before it purchased Paramount and the now-struggling Blockbuster Entertainment. The recent, abrupt departure of the well- regarded executive brought in to fix Blockbuster has left many scratching their heads. Despite the improved stock performance of Time Warner, a similar company and longtime Wall Street laggard, Viacom stock still struggles. Since the beginning of March, it's come off about 20 percent. What's an investor to do? "It's a great buying opportunity," says Dennis McAlpine, a media and entertainment analyst at the brokerage firm Josephthal, Lyon & Ross. McAlpine is not being tongue-in-cheek here. Neither is Christopher Dixon, a media analyst at the brokerage firm PaineWebber. "It's cheap," he says. Do they have a point? Could be. Contrarian investing has made fortunes for some. It's made fools of others. One of the main points both men make: The downside risk is now minimal. The entertainment conglomerate's biggest problem is Blockbuster, the video rental chain whose growth has slowed to a crawl amid the emergence of a variety of home-viewing alternatives like pay-per- view television and direct satellite TV. "Right now, the market has totally discounted Blockbuster," says Dixon, who argues the video chain produces oodles of cash to service Viacom's $10.5 billion in debt. He likes the performance of MTV Networks, which includes MTV, VH-1 and Nickelodeon. He feels good about Simon & Schuster and sees some good films in the pipeline at Paramount. So if pros like Dixon and McAlpine are bullish on Viacom, why does the Street keep pounding it? …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.