Less than a month after agreeing to a merger of two media giants, the chief executive of the soon to be named ViacomCBS is telling investors he doesn’t plan on doing anything dumb that will further erode the company’s rapidly declining, post-merger share price, the Fox Business Network has learned.
Bob Bakish hit the road this week meeting with investors to relay a simple message: He is not looking to do any major acquisitions—at least not in the near term—that will lead to a dilution of shareholder value, according to people with direct knowledge of the conversations.
Shares of Viacom have slumped 15 percent, while shares of CBS have dropped 14 percent since the Aug. 13th merger announcement, as investors began to calculate, among other issues, the costs associated with the new company embarking on a buying spree to better compete against mega-media giants such as The Walt Disney Company, Comcast Corporation, and AT&T Inc.
The media outlets that have been rumored to be on Bakish’s acquisition list include Discovery Communications, which has a market value of $14 billion, and the significantly smaller Lions Gate Entertainment Corp., which is valued at $2 billion.
Bakish is now making the rounds telling investors he is not going to seek any transaction that would negatively impact the new company’s stock price. “In the near term ViacomCBS won’t do anything substantial,” a person with direct knowledge of Bakish’s thinking told Fox Business. “To the extent, a good opportunity comes up (Viacom) would take it but (Bakish) will be highly disciplined when it comes to acquisitions.”
Given the current market prices on prospective companies, Bakish has been telling investors his approach to new acquisitions all but rules out an immediate purchase of Discovery. The cable TV powerhouse controls such brands as the Food Network, Animal Planet, OWN: Oprah Winfrey Network, TLC and 15 other channels. A possible acquisition of Lions Gate, the studio that produced such theatrical feature films as “Hunger Games,” “La La Land,” and “Twilight,” also owns the premium cable channel Starz, and may be the more likely target particularly if its current valuation declines, these people said (Last week reports surfaced that Comcast may stop carrying Lions Gate’s largest channel Starz—a move that could depress Lions Gate’s price tag).
A Viacom spokesman had no comment.
The long-awaited reunion of CBS and Viacom, came after years of bickering and deliberating between the boards of the respective companies, which are controlled by Sumner Redstone’s National Amusements, Inc.