Viacom: Should Sumner Take It Private?

Why is Viacom (VIA) still a public company?

Pali Research analyst Richard Greenfield thinks Viacom Chairman Sumner Redstone ought to consider that question carefully. In a research piece this morning, Greenfield recalls that in July 2006 he wrote a report entitled “Dear Mr. Redstone: Take Viacom Private.” Since that time, he says, Viacom has installed a new CEO and CFO, topped EPS expectations in 2006 and 2007, showed improving cable ratings and bought back $3.3 billion of stock, or about 11% of the shares outstanding. But in that period, the stock has dropped 2%, cutting its one-year forward EPS multiple to 10.6X from 14.4X.

Greenfield thinks that “given increasingly broad investor distaste for Viacom’s management team and the lack of respect and confidence in the company’s earnings prospects,” Redstone should “seriously revisit our go-private analysis.”

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