Facing investor headwinds as it approaches upcoming licensing renewal deals with the No. 3 pay-TV operator in the U.S., Viacom is getting pressure in some Wall Street circles to remarry CBS Corp.
Speaking to a number of investment analysts, the New York Post describes Viacom, under the long-tenured direction of 91-year-old chief executive Sumner Redstone, as still reluctant to reunite with CBS, from which it separated from in 2006.
However, on Tuesday--despite a more sanguine note from MoffettNathanson principal analyst Michael Nathanson--Viacom got rocked by Morgan Stanley, which predicted that Dish Network (NASDAQ: DISH) will draw a hard line with the conglomerate in the upcoming talks.
It was the second such analyst note in a week, the first one leading to a 9 percent cratering of Viacom's stock.
Analysts are suggesting the CBS reunion would solve a leverage issue for Viacom as it faces the prospect of negotiating with a satellite operator that controls 14 million subscribers. According to Citigroup's Jason Bazinet, who started Viacom's Dish panic last week with the original note, Dish stands to lose $700 million in ad and affiliate fee revenue if it's pulled from Dish.
Analysts predict Dish will demand a licensing agreement with minimal carriage fee increases for Viacom networks, while also insist on including digital rights for Viacom networks for the operator's new over-the-top service, Sling Television.
The upside for Viacom: It has completed 70 percent of its pay-TV renewal deals, carving out agreements with Time Warner Cable (NYSE: TWC) and Comcast (NASDAQ: CMCSA).
For more:
- read this New York Post story
Related links:
Viacom gives Dauman another raise amid Dish blackout fears, falling stock price
Cable One has lost 18% of video subs since Viacom blackout, analyst says
Cable companies push back on spiraling program costs
Viacom misplays its renewal negotiations with Suddenlink
Sony unveils pay-TV service PlayStation Vue... sans ESPN