Viacom urged by Bernstein analyst to sell off assets

A Wall Street analyst thinks Viacom’s best chance of survival is to blow itself up and then go private.

The stock jumped 4.5 percent, closing at $36.86, on Monday after a report from Bernstein analyst Todd Juenger suggested that Viacom should just throw in the towel as a public company.

Viacom, run by embattled Chief Executive Philippe Dauman, has been under attack from every quarter for the past few months and is set to face an angry shareholder base at its March 14 annual meeting.

Juenger gave battered shareholders little to hold onto in the bleakest of times. He suggests Viacom stock is going to $17 and the networks “are becoming less valuable every day (wasting assets). Better to sell sooner than later,” he writes in a caustic investor note.

Juenger suggests selling movie studio Paramount, international operations and African American audience-focused BET, while taking private the core US cable networks — MTV, Comedy Central and Nickelodeon.

The analyst’s report suggests that the saleable assets have a liquidation value of $8.5 billion, while questioning the current market valuation of Viacom’s US cable core assets of $18 billion, suggesting the US cable channel’s private equity value is more likely around $12 billion.

The vocal analyst forecast that the cable programmer is in a death spiral but could salvage itself from a “dismal cycle of perpetual declines leading to ever-decreased equity value,” by selling off the parts and taking the core cable business private.

While Viacom is controlled by National Amusements Inc. — led by the ailing 92-year-old Sumner Redstone — current management’s turnaround initiatives have done little to boost the stock price.

The company revealed an investment in TV device Roku and a deal to sell ads on Snapchat in recent weeks but is short on TV hits. The firm even announced a spin-off of Spike TV’s popular “Lip Sync Battle” for Nickelodeon on Monday.

Juenger reduced his target price on Viacom to $30 and slapped an underperform rating on the company.

Despite the stock’s performance Monday, Juenger believes that there will be a decrease in affiliate fees following the AT&T/DirecTV renewal, which the carrier bragged in October was the “best deal in the industry.”

On Friday, Institutional Shareholder Services recommended shareholders withhold votes for the six members of Viacom’s compensation and audit committee.

Viacom reps declined to comment on the report but pointed to improved numbers in digital audiences. Viacom properties ranked 44th in the Top 100 properties for the latest month, January.