Viacom slips, CBS moves higher after stock sale

posted: 42 DAYS 21 HOURS AGO

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NEW YORK -Billionaire Sumner Redstone's decision to sell off shares of Viacom Inc. and CBS corp. pushed Viacom's stock price lower Thursday, while CBS gained after reiterating its operating income forecast for the year.

Viacom fell 62 cents, or 2 percent, to $29.96, while CBS jumped 65 cents, or 5.2 percent, to $13.17.

Redstone owns a controlling interest in both entertainment companies through National Amusements Inc. The company said Wednesday it will sell $600 million worth of shares in Viacom and $344 million of CBS to pay down its $1.46 billion in debt, about $500 million of which come due later this month. It will still own a controlling stake, the company said.

In a note to investors, Caris & Co. analyst David Miller called the stock sale a "180 degree turn" for Redstone, who has promised repeatedly not to sell more shares after creditors forced National Amusements to dump more than $200 million worth last October.

"The move implies — at least to us — a stark admission by Mr. Redstone that CBS shares are fairly valued at best given current fundamentals," Miller wrote. He kept a "Sell" rating on the company.

CBS also reaffirmed its outlook for the year. The company said Wednesday it expects operating profit of between $1.73 billion and $1.93 billion.

Viacom, meanwhile, got an upgrade Thursday from Barrington Research Associates analyst James Goss.

"We had not appropriately acknowledged the cost control discipline Viacom continues to implement in its film studio," Goss told clients in a note, upgrading the stock to "Outperform" from "Market Perform."

Viacom includes the Paramount movie studio as well as cable networks MTV and Comedy Central.

2009-10-15 13:59:41