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Berkshire Hathaway discloses investment in Viacom

May 15, 2012|By Meg James
  • Warren Buffett's Berkshire Hathaway disclosed in an SEC filing that it has begun buying stock in Viacom. Above, Buffett in an interview with Fox Business Network.
Warren Buffett's Berkshire Hathaway disclosed in an SEC filing that… (Associated Press )

Viacom is finally appealing to the middle of the country.

Tuesday, Warren Buffett’s Berkshire Hathaway disclosed that it has begun buying stock in Viacom Inc., controlled by billionaire Sumner Redstone. Omaha-based Berkshire Hathaway, in a filing with the Securities and Exchange Commission, said that during the first three months of the year it had acquired nearly 1.6 million shares in Viacom -- a stake worth $75.5 million.

The market capitalization for Viacom -- which boasts the MTV Networks, the home of “Jersey Shore,” Comedy Central, Nickelodeon, BET, TV Land and Paramount Pictures -- is nearly $27 billion. That makes the Berkshire investment modest, but nonetheless intriguing.

Berkshire seems a little late to Viacom’s stock party.  

Viacom B shares have soared to more than $45 -- triple the price three years ago when Redstone’s corporate empire appeared to be teetering on the brink of ruin after banks demanded the Redstone family investment firm repay more than $1 billion in loans. In early 2009, amid the stock’s collapse, Viacom’s shares traded for about $15.

Viacom has roared back during the last two and a half years. And the company’s more valuable shares, premium A shares that carry voting rights, are trading even higher -- at about $51. Privately, some Viacom investors attribute the spread between the two classes of stock to a belief that the company could be in play within a few years, which could drive up the value of the stock, particularly the voting shares.

Redstone, who turns 89 this month, controls about 79% of Viacom’s voting shares. However, only a small number of those shares become available on the market, which might explain why they trade higher than B shares as well as why Berkshire Hathaway bought B shares.

Berkshire Hathaway also disclosed that it now holds more than $1 billion of stock in the El Segundo based satellite TV giant DirecTV. DirecTV’s stock, trading for about $47 a share, has recovered considerable ground after taking a tumble last summer. Berkshire also noted that it owns about $265 million in shares of Liberty Media Corp., which are trading for about $84 a share. Liberty has gained attention recently, increasing its holdings in Sirius XM Radio.

In an unrelated move, Viacom reported to the SEC on Tuesday that its chief executive, Philippe Dauman, sold more than 286,000 Viacom B shares, holdings worth $13.75 million, before taxes and commissions.  

The divested shares represented about 3% of Dauman’s equity in the company. It was the first time since Dauman became CEO in 2006 that he sold shares in the company.


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