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Viacom to Buy Back Up to $1.75 Billion of Its Stock

September 01, 1998|From Bloomberg News

Viacom Inc., the third-largest U.S. entertainment company, will repurchase as much as $1.75 billion in stock as Chairman Sumner Redstone tries to boost a share price that has fallen 22% in the last month.

Viacom said the buyback, which will begin immediately, could involve either its widely traded Class B shares or its Class A shares. Viacom class A shares plunged $4.63 to $49.25 on the Amex.

The recent decline came even though the company's prospects are the best they've been in four years. Its chain of Blockbuster video stores is reporting strong growth after two years of lackluster results, and its Paramount Pictures studio has produced a string of hits.

"Sumner Redstone is going nuts over his share price as any good CEO should," said Laura Martin, an analyst at Credit Suisse First Boston Inc., which added the stock to its "focus list" before the announcement. "Everything for this company is going better than expected."

Until the decline in August, New York-based Viacom had been a favorite of investors in media stocks after slumping in 1997.

"The stock has gone down much too fast, but you are seeing this in a lot of good companies, said Marvin Roffman of Roffman Miller Associates, which owns Viacom shares.

Many analysts expect improved financial results from Viacom the rest of the year. The biggest reason for this is Blockbuster, the world's largest chain of video stores, whose profits had plunged amid a string of failed marketing strategies.

Under new management, the chain has slashed the costs of the videos it buys under new profit-sharing agreements with Hollywood studios.

Paramount, meantime, is No. 1 in box office market share because it has had at least a part interest in some of the biggest movies of the year, including "Titanic" and "Saving Private Ryan."

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