Viacom Still in Neutral Zone - Analyst Blog

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Viacom Inc. ( VIAB ) posted disappointing results for the third quarter of fiscal 2012. Both the top-and bottom-lines fell below the Zacks Consensus Estimates. Advertising revenue (both domestic and international) dropped significantly, primarily due to serious concerns regarding the weak viewership ratings of its flagship Nickelodeon and MTV channels. Similarly, customers' responses to new box-office releases of Paramount Pictures were lukewarm.

However, there are several positive factors that still remain for Viacom. Management is hopeful that its affiliate fee revenue will accelerate in fiscal 2013 and that its advertising revenue will improve in the ensuing fourth quarter. Further, Viacom is generating strong free cash flow enabling the company to raise its dividend rate and to pursue a systematic share repurchase program. We believe Viacom is currently fully valued and therefore, reaffirm our Neutral recommendation.

Viacom benefits from a well-balanced asset mix with entertainment content at its core. The company enhanced its brands worldwide through the creation and acquisition of hit programs, new channels, successful motion pictures and other forms of entertainment, including video game offerings.Viacom competes with CBS Corp. ( CBS ), Time Warner Inc. ( TWX ), News Corp. ( NWSA ), and Walt Disney Co. ( DIS ) to name a few.

An improving U.S. economy together with Viacom's disciplined management team continue to make us optimistic about the company's future growth prospects. We believe that Viacom is well positioned for long-term growth as it continues to benefit from its predominately cable networks-based business model, hit movie releases, and monetization of contents from multiple distribution platform.


 
CBS CORP (CBS): Free Stock Analysis Report
 
DISNEY WALT (DIS): Free Stock Analysis Report
 
NEWS CORP INC-A (NWSA): Free Stock Analysis Report
 
TIME WARNER INC (TWX): Free Stock Analysis Report
 
VIACOM INC-B (VIAB): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CBS , DIS , NWSA , TWX , VIAB

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