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Viacom may buy in stock
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December 6, 1999: 1:50 p.m. ET
With few acquisitions on the horizon, Redstone hints at a massive buyback
By Staff Writer Tom Johnson
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NEW YORK (CNNfn) - Viacom Corp. Chairman Sumner Redstone delivered a bullish outlook for a merged Viacom/CBS Corp. Monday, and hinted he may use the company’s multi-billion-dollar cash flow after completion of the merger to initiate a massive stock buyback.
Speaking to a packed audience at the PaineWebber Media Conference in New York, Redstone declared the proposed company uniquely positioned to capitalize on the projected explosion in U.S. advertising the next several years - possibly creating an additional $40 billion in market capitalization over the next several years, he said, citing a PaineWebber report.
He also said with few apparent buying opportunities on the horizon, he would likely utilize the combined companies’ pool of available cash to enhance shareholder value through a large stock buyback.
"There isn’t much out there right now,” Redstone said of possible acquisitions following Viacom’s planned $35.6 billion merger with CBS Corp., which is expected to be completed during the first half of next year. "I guess what you’d expect to see is a multi-billion-dollar buyback.”
Redstone’s comments followed an hour-long presentation by advertising experts, who projected advertising revenue will grow by roughly 7 percent next year.
Redstone then strode to the podium, and noted the combined Viacom/CBS Corp. will start as the industry leader in advertising revenue in every media category from day one.
"I promise you, the new Viacom will provide advertisers ways to reach every demographic group across all platforms,” he said. "The main agenda is to take advantage of this explosive advertising growth.”
Following Redstone’s speech, analysts said his exuberance was warranted.
"I think the context of what he was saying was right on,” said David Londoner, an analyst at Schroeder & Co.
"Viacom is uniquely positioned to take advantage of new advertising spending,” said Christopher Dixon, an analyst at PaineWebber. "We are comfortable building a portfolio of Viacom stock at these levels.”
Viacom’s (VIA) stock, after jumping Friday on the expectation of bullish comments from Redstone at the conference, shed 7/16 to 52-5/16 by midday Monday. CBS (CBS) lost 5/16 to 54-1/4.
Redstone said he now hopes to consummate the CBS merger by March or April, but several hurdles remain, including a decision on the fate of the UPN television network, jointly owned by Viacom and Chris-Craft Industries.
Redstone reiterated his belief that current government regulations restricting the ownership of television stations in too many markets, and said he hoped to maintain the network and not sell it off, as many analysts say is likely.
He also would not comment on published reports that CBS may be in negotiations to buy Chris-Craft (CCN).
There also remains some question about the combined companies’ Internet strategy. Viacom has actively built its Internet operations internally, while CBS has opted largely to take stakes in existing operations in exchange for advertising space.
Redstone, however, declined to comment on how those two strategies might be merged.
"You expect me to comment with [CBS Chief Executive Officer] Mel Karmazin sitting out there,” Redstone joked. Karmazin attended Redstone’s speech, but did not make any comments himself. 
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