On the heels of tough reports from analysts Richard Greenfield and Aryeh Bourkoff, both the NYT and the WSJ (sub. req.) picked this weekend to examine the deconstruction of Viacom into “new” Viacom led by Tom Freston and CBS with Les Moonves as CEO — and to find it wanting, particularly where the former is concerned. Sumner Redstone, the chairman of both companies, told the Journal: “I always said it would take at least a year to evaluate the split and the performance of the two companies. I have no second thoughts.” He also insisted that Tom Freston’s job is secure; Greenfield suggested that mioght not be best in his July 10 note: “… the ‘new Viacom’ is Freston’s chance to run a business unencumbered by weak assets. It is not yet clear that Freston is up to the task of running a multi-platform content company versus a group of cable networks.”
Among the tea leaves:
— Viacom, the company that was supposed to be in the best position to capitlize on growth, has lost nearly 20 percent of its stock value from a high of $44.91. It closed Friday at $33.39.
— Cable advertising increases may be limited to high-single digits this year after double-digit growth. The NYT makes a point of mentioning the OMD multiplatform deal for $300 million.
— Redstone’s sale of some of his Viacom shares, agreed upon as part of a buyback plan, caused some investor/analyst confusion.
— Viacom isn’t communicating its strategy effectively. (Translation: peppering presentations with “multiplatform” mentions isn’t enough.) The company has made some good acqusitions — Neopets, Xfire — but hasn;t explained them well enough.
— That said, the Journal analysis is oddly dismissive of MTVN’s broadband efforts and quick to suggest competition from the web is damaging the cable networks.. In the NYT, Bourkoff and Leo Hindery, Jr., cable vet and managing partner of Intermdia Partners, say Viacom was too late on the digital front and fault the company for losing MySpace.com to News Corp., which really was late to the party.( Now, just imagine that Viacom had outbid Murdoch and think of all the grousing we’d have heard about spending too much.)
Meanwhile, sibling rival CBS, up nearly 9 percent since the split, fares much better, particularly as the Journal suggests broadbacst networks may be better positioned for competition online because of big-ticket events.
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