Viacom set up for merger scenarios
Viacom's decision to replace Chief Executive Tom Freston with one of the industry's top deal makers, against a backdrop of declining revenue at its cable networks, sets up a chance for the company to pursue a merger, an analyst said Tuesday.
Meanwhile, CBS Chief Executive Les Moonves, who has watched his company's stock rise 20% since the beginning of 2006, may have put himself in a position to run both Viacom and CBS, others said.
Robert Routh, entertainment analyst at Jefferies & Co., said Viacom should consider a merger with portal giant Yahoo.
Routh pointed to the presence of Yahoo Chief Executive Terry Semel, who, with Bob Daly, turned Warner Bros. into the industry's most profitable studio over a 20-year period that ended in 1999. "Semel and Daly were the gold standard," Routh said.
"If Terry Semel had Viacom, he could run Paramount, turn that thing around in 20 minutes, leverage the cable networks across the Yahoo portal -- and suddenly they would have a behemoth of a company that would be capitalizing on all distribution media," Routh said, and it would be "able to recognize revenue from all of them."
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