- Morgan Stanley, LionTree said to help on capital structure
- Directors must decide what to do with $12 billion in debt
Viacom Inc.’s revamped board will meet next week to discuss strategic options, including the possibility of deals involving movie studio Paramount Pictures, according to people familiar with the matter.
The directors are holding an all-day strategic review on Sept. 14, said the people, who asked not to be identified discussing private information. Former Chief Executive Officer Philippe Dauman submitted details of his talks to sell a minority stake in Paramount to the board last week. No concrete deal is on the table, the people said.
The media giant’s board has hired Morgan Stanley and LionTree Advisors on a short-term basis to help examine its capital structure and dividend payout, said another person familiar with the matter.
Viacom shares jumped as much 4.7 percent on Bloomberg’s report.
The Viacom board has the tall task of turning around a media company whose sales, profit and stock price have declined for two straight years. Shari Redstone, daughter of controlling shareholder Sumner Redstone, has taken on a prominent role in the boardroom since her family dismissed Dauman and installed five new board members. The Redstones’ holding company, National Amusements Inc., is being advised by Barclays Plc and Evercore Partners Inc., another person said.
Shari Redstone is considering recombining Viacom and CBS Corp., people familiar with the matter have said, though any such deal would require the approval of both companies’ boards. CBS hasn’t received any indication that a deal is imminent, people familiar with the company said.
Viacom’s board must also decide what to do with its $12 billion in debt. The company can either let credit ratings agencies downgrade the debt, or work aggressively to improve its leverage by cutting its dividend or selling assets.
While selling a stake in Paramount would help the company pay off some of its debt, the biggest strategic concern for Viacom’s new board is the erosion of viewership for its cable channels. MTV and Comedy Central are particular concerns, though even viewership of Nickelodeon has slipped over the past few years.
Viacom shares rose 2.5 percent to $40.54 at the close in New York. CBS gained 1.7 percent to $52.62.
While Viacom’s revamped board considers its future, Sumner Redstone’s lawyers are working on fulfilling his part of the bargain that cleared up much of Viacom’s legal entanglements. The attorneys are working on scheduling a meeting between the 93-year-old billionaire and his granddaughter Keryn, one requested by a judge in Massachusetts, according to his spokesman Mike Lawrence.
Keryn Redstone dropped her opposition to the settlement between her grandfather and Dauman last month. In exchange, she’ll get the meeting and changes to a family trust to ensure equal treatment for her. Both the meeting and the changes are expected to happen before a Sept. 23 hearing in Massachusetts.