Tuesday, January 26, 2016

Viacom's Struggles

Viacom, the conglomerate containing Nickelodeon Cartoon Studios and Paramount Animation, is getting a "thumbs down" from financial gurus.

The recent 99-page presentation by SpringOwl Asset Management spotlights media company Viacom (NASDAQ:VIA) (NASDAQ:VIAB) as a high-risk takeover target in the entertainment industry. SpringOwl has released a lengthy report providing suggestions for a much needed turnaround plan that could potentially give the stock upside potential of 135%.

In SpringOwl's report it suggests that a key catalyst for stock value improvement would be the overhaul of the company's management.

The key issues at Viacom remain that they've excessively overpaid senior management, reporting a combined $432 million in compensation over the past five years for CEO Philippe Dauman and COO Thomas Dooley. And yet its stock has been grossly underperforming.

Viacom has missed the move to digital with CEO, Philippe Dauman, really lacking industry experience and vision for digital products. The absence of a true digital strategy investment strategy is just one example of poor management according at Viacom, where, according to SpringOwl has a "decade of missed opportunities online." ...

I think we can anticipate changes at Sumer Redstone's conglomerate. For as Bloomberg reported:

... [SpringOwl] has pressed for changes at companies including Yahoo! Inc. and Bwin.Party Digital Entertainment Plc, which agreed to be bought last year for about $1.7 billion.

The firm also called on Viacom to explore an investment from Alibaba Group Holding Ltd. or Amazon.com Inc. in its Paramount Pictures film studio. SpringOwl said Viacom should consider a merger with AMC Networks Inc., cut costs more and push further into online offerings. The investment company cited strategic missteps, such as licensing too much content to Netflix Inc., suing YouTube and selling an investment in Vice Media for much less than other investors have paid since then. ...

So how much longer Sumner's corporation will be Sumner's company is an open question.


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