NEW YORK (CNNfn) - Viacom Inc.'s stock edged higher for the second consecutive day Thursday on speculation the company might seek a merger with CBS Corp.
Shares of the New York-based entertainment group climbed as high as 45-3/8, or more than 5 percent, Thursday morning following a more than 10 percent jump in heavy trading on Wednesday.
The stock got an early boost Wednesday from word that well-known money manager Leon Cooperman had taken a more than 1 million share stake in the company during the second quarter -- making it his largest new position of the quarter.
But the stock has kept going ever since as rumors swirled Viacom was testing the waters for a possible merger with the nation's No. 1 broadcast network.
One analyst who spoke with Viacom officials Wednesday said CBS Chief Operating Officer Mel Karmazin recently had a "casual" sit-down meeting with Viacom Chairman Sumner Redstone, but called the meeting more exploratory in nature.
"Nothing is imminent," the analyst said.
There was also speculation that CBS simply might move to acquire certain struggling UPN network stations owned by Viacom under new, more relaxed FCC rules concerning television station ownership in large markets.
Either way, the rumors alone were enough to light a fire under the company's stock price which, like many media and entertainment stocks, has been under pressure most of the summer.
Analysts said any deal between CBS and Viacom would produce great synergy's as well as solve a nagging problem for Viacom -- the lack of an apparent successor to Redstone, who owns about two-thirds of Viacom's outstanding shares.
Karmazin is highly regarded in the entertainment industry and, unlike Viacom's shares, CBS's stock has climbed steadily from the $20 level last October. An outright purchase of Viacom would give the network the studio production capabilities is sorely lacks, as well as access to several popular cable networks, including MTV, VH-1 and Nickelodeon.
"I think there's a realistic chance that Sumner Redstone and CBS are exploring some kind of venture," said Frederick Moran, an analyst at ING Barings.
"There's a lot of synergies there and a lot of great reasons for it," agreed David Londoner, an entertainment and media analyst at Schroder & Co. "The reaction on Wall Street if CBS bought Viacom would be a great story."
But in the same breath, Londoner doubted any moves were imminent.
The FCC recently ruled one company can own two television stations within the same large market without one counting toward the current 35 percent cap on national coverage.
That would seemingly open the door for CBS to purchase at least some underperforming UPN stations from Viacom in a handful of markets, but analysts questioned whether such a deal would be worth the network's while.
Meanwhile, Cooperman doubted whether the public disclosure of his new stake in the company had anything to do with the stock's current rise.
"Half the stocks I picked are up and half of them are down," Cooperman said, while indicating he has taken an even larger stake in Viacom since the second quarter.
"We really like Viacom," he said. "It's a well-run company, the stock was cheap and that's why we bought it. Sumner Redstone is a very shareholder-savvy guy."
In early afternoon trading, Viacom (VIA) rose 2-1/16 to 45-1/8 while CBS (CBS) eased 1-1/4 to 48-3/4.