May 19, 2017 / 5:22 PM / 2 months ago

CBS CEO Moonves says Viacom is undervalued

3 Min Read

May 19 (Reuters) - CBS Chief Executive Officer Leslie Moonves told shareholders on Friday he believes shares of Viacom , which the network considered merging with last year, are undervalued.

Moonves made the comment in response to a shareholder's question, and when asked by another why CBS ever considered a deal with Viacom, he responded: "Viacom is a very fine company."

With the television industry facing growing numbers of TV viewers canceling their cable subscriptions to watch shows online, as well as a softening ad market, some Wall Street analysts anticipate consolidation in the media industry.

National Amusements Inc, the privately held movie theater company through which media mogul Sumner Redstone and his daughter Shari control the majority of voting shares of CBS and Viacom, last year proposed the two companies consider merging.

They called off the effort in December after the two sides could not come to an agreement on Viacom's valuation..

Since then, CBS' shares have fallen nearly 3.5 percent, but were up 1.8 percent in midday trading on Friday, at $61.47. Viacom's shares have fallen 12 percent, but were up 0.8 percent on Friday, at $34.27. Viacom trades at a lower price-to-earnings multiple than its peers.

"If VIAB shares (or earnings) continue to decline due to accelerated cord-cutting, we wouldn't be surprised to see CBS+VIAB vol. 2," Steven Cahall, an analyst at RBC Capital Markets, wrote in a note Friday.

Asked by another shareholder if CBS would revisit a merger with Viacom, Lawrence Tu, senior executive vice president and chief legal officer at CBS, said the company is continuing to focus on its current strategy.

In opening remarks of the meeting, where shareholders re-elected all of CBS' directors, Moonves thanked Redstone, who the company said was listening by the phone, for his advice and friendship over the years.

Redstone, 93, on Friday officially gave up his voting role on CBS' board, remaining chairman emeritus.

"Everyone at CBS owes his thanks to Sumner for everything he has done for this company," said Moonves, also thanking Shari Redstone, who is vice chair of CBS. The company also announced on Friday that its board approved a quarterly dividend of $.18 per share, payable on July 1, 2017, to shareholders of record on June 9, 2017.

Reporting by Jessica Toonkel; Editing by Dan Grebler

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