Viacom: On the Prowl Again


With one of the strongest balance sheets in the industry and an apparent rebound in the advertising market, Viacom Inc. chief financial officer Richard Bressler said that the programming giant could be on the prowl for more acquisitions.

But Bressler, speaking at the UBS Warburg Media Conference last week, tempered his remarks by adding that any acquisitions that Viacom made would have to be accretive and beneficial to the core business.

Viacom had been involved in the early rounds of negotiations for Rainbow Media Holdings Inc.'s Bravo channel (which was sold to General Electric Co.'s NBC unit for $1.25 billion in cash and stock) as well as Telemundo, the Spanish-language network NBC purchased last year for $2.7 billion.

While Bressler said those assets were strategic fits, Viacom could not justify the cost of making those acquisitions.

Regarding Telemundo, which he estimated sold for about 27 times forward cash flow, Bressler said "there was no way we could find to make money on that."

While he would not be specific on potential acquisition targets, Bressler said there is one area that Viacom will not tread.

"One thing we don't see a lot of strength in is general-entertainment cable networks," Bressler said. "They are a little bit of a commodity."

He added that he doesn't see the need for additional general entertainment networks beyond what Viacom already owns.

But large-market television and radio stations might make attractive purchases.

While Viacom's overall performance is strong — it is on track to finish the year with revenue of $24.4 billion (up 5 percent) and cash flow of $5.6 billion (up 10 percent) — the stock price has stalled due to reports that Viacom chairman Sumner Redstone and chief operating officer Mel Karmazin aren't getting along. That perceived friction — and the fact that Karmazin's contract with Viacom expires at the end of 2003 — has caused some to speculate that Karmazin would leave the company even before his contract is up.

But according to reports last week, Karmazin told analysts and investors at the Credit Suisse First Boston media conference Tuesday that, given the pressure his employment status has had on the stock, he would like to work something out with the company "sooner rather than later."

Bressler said at the UBS conference that Karmazin and Redstone are engaging in discussions regarding that contract "as we leave this year."