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CEO Shake-Up May Allow Viacom To Resume Focusing On Operations Rather Than Legal Battles

Viacom Inc. NASDAQ:VIAB, CBS Corporation NYSE:CBS - CEO Shake-Up May Allow Viacom To Resume Focusing On Operations Rather Than Legal Battles

Viacom, Inc. VIAB 0.72% said on Saturday CEO and President Phillipe Dauman would step down, remaining as non-executive Chairman until September 13. Until the company’s fiscal year ends on September 30, COO Tom Dooley will temporarily assume the CEO spot.

The arrangement means all legal disputes among Sumner Redstone and the company will cease, and that National Amusements Inc., the entertainment firm’s controlling shareholder, got to appoint the five new members of the Board it had previously announced.

BMO Capital Markets analysts Daniel Salmon and Ygal Arounian reiterated a Market Perform rating and $40 price target on the stock. While their stance is still far from bullish, as they believe long-term challenges linger, they pointed out that the CEO transition “should allow Viacom to resume more normal operations,” after months of deteriorated business.

“The legal battles over governance have held up completion of SVOD agreements and have likely held up negotiations to distribute networks in certain skinny bundles or move on a potential minority investment in Paramount,” the analysts said. What hasn’t changed is the company’s ratings issues and soft stand when negotiating network distribution, in both traditional and OTT packages.

The report pointed out, the option of re-merging with CBS Corporation CBS 0.48% remains on the table. Interestingly, press reports have suggested that CBS CEO Les Moonves could be offered the CEO of both companies – either combined or as standalone entities. Either these options would be a positive for shares of CBS, BMO concluded.

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