On his first day as Viacom’s new acting chief executive, Robert Bakish wrote a $345-million check to buy Television Federal, a Spanish-language television company in Argentina.
It was an interesting move, in part, because investors have been more interested lately in whether Viacom will take steps to reunite with its former corporate sibling, CBS Corp.
But rather than simply pine for a pairing with CBS, Viacom’s decision to buy a broadcast network in Buenos Aires, along with eight channels in the interior part of Argentina, suggests the New York media company might be paving the way to operate as a stand-alone company should the merger plans fizzle. Bakish, who is not part of Viacom’s special committee that is in talks with CBS about uniting, has said his mandate is to improve operations.
The deal for Television Federal, or Telefe, announced Tuesday is the first piece of Viacom’s new management’s strategy to bolster its businesses with an eye toward international expansion.
“Telefe is an outstanding broadcast and production business, and this acquisition will accelerate our growth strategy in Argentina, one of the most advanced and valuable media markets in Latin America,” Bakish said in a statement.
The Argentine channels will be combined with Viacom’s pay-TV networks in South America, which include MTV, Nickelodeon, Nick Jr., Comedy Central and the Paramount channel. Telefe also offers a deep vault of Spanish-language programming, more than 33,000 hours of content, and Telefe Internacional, a pay-TV network that is available to 10 million subscribers in 17 countries.
Telefe reaches 95% of all households in Argentina, a country with a population of 43 million, according to Viacom.
“While we maintain a relatively cautious outlook on Viacom's operations, we see today's action as a positive, albeit still modest, step forward for the business,” Guggenheim Securities media analyst Michael Morris wrote in a Tuesday report. “We still see a recombination with CBS ... as a possibility, and believe that the Telefe investment would likely also benefit the combined company.”
Insiders say its too early to know whether Viacom and CBS, both controlled by Sumner Redstone’s family, eventually will agree to combine. A decision could come in a few weeks. One potential sticking point is CBS’ demand that its chairman and chief executive, Leslie Moonves, who would lead the combined entity, would have a board he feels comfortable with and the autonomy to manage Viacom’s business units as he sees fit.
Valuations of Viacom stock also could be an obstacle in merger talks as some believe the market has properly valued Viacom’s shares, while others believe that the company’s businesses are worth more than its current price suggests. Viacom stock has fallen 40% over the last two years.
Viacom shares closed down 25 cents at $38.61 on Tuesday. CBS shares rose 35 cents to $59.21.