Please ensure Javascript is enabled for purposes of website accessibility

Why Viacom Shares Are Trading Higher Today

By Lou Whiteman - Updated Apr 16, 2019 at 6:57AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A settled contract dispute reportedly could rekindle merger talks.

What happened

Shares of Viacom (NASDAQ: VIA) (VIAB) traded up more than 7% on Tuesday afternoon after the media company settled a contract dispute with AT&T and a report surfaced claiming on-again, off-again merger talks with CBS (PARA 5.06%) could soon resume.

So what

Viacom on Monday reached a deal with AT&T to avert a blackout of Viacom channels including MTV and Comedy Central on AT&T platforms. The New York Post reported that the ongoing dispute with AT&T was a "major hurdle" in negotiations with CBS, saying that with the issue now resolved, CBS' independent directors intend to tell the rest of the board they are ready to head back to the negotiating table.

A remote control pointed at a television set.

Image source: Getty Images.

It's been more than a decade since CBS and Viacom split into separate companies. But in recent years, Shari Redstone, whose family controls both, has been pushing for the two to reunite. The initial efforts were thwarted by CBS' former CEO Les Moonves, but with Moonves now out, the Post said, top officials believe some of the sticking points from earlier negotiations can be resolved.

Check out the latest earnings call transcripts for Viacom, AT&T, and CBS.

Now what

Even if the rumors are true, there are no assurances a deal will happen. The Post said that CBS is expected to ask Viacom to pay a premium to get a deal done, and it is unclear whether Viacom CEO Robert Bakish and CBS interim CEO Joe Ianniello would run the combined company.

Viacom could certainly use a boost. Even after the Tuesday gains, the company's shares are down 28% over the past three years, significantly underperforming shares of CBS (down 12%) and the S&P 500 (up 37%) over that time period. Given the uncertain outlook for cable properties in a quickly evolving media landscape, it's easy to see why Viacom shareholders would be excited by the prospect of a reunion with CBS.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Viacom, Inc. Stock Quote
Viacom, Inc.
VIAB
Paramount Global Stock Quote
Paramount Global
PARA
$25.76 (5.06%) $1.24

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
336%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.