Viacom Prepares to Sell $5 Billion in Securities

Viacom Inc., the world’s third-largest media company, filed with the Securities and Exchange Commission on Tuesday to sell $5 billion in securities.

Viacom, which owns the CBS and UPN broadcast networks as well as the MTV and VH1 cable channels, will register the securities in advance, according to an S-3 filing with the SEC. That allows the New York-based company to sell securities when stock conditions are favorable or when financing needs arise.

Selling new stocks and bonds could help Viacom refinance its debt after a run of big purchases, an analyst said. Under Chairman Sumner Redstone, Viacom bought CBS Corp. for about $45 billion in May. The company has since agreed to buy cable network BET Holdings Inc. and the stake it didn’t already own in radio broadcaster Infinity Broadcasting Corp.

“I think they’re taking advantage of the market, with interest rates down, to offer some debt,” Weatherly Securities analyst Barry Hyman said. “It also gives them the capital structure to look at future acquisitions.” Hyman rates Viacom shares a “buy.”

Terms of the securities--which will be offered in the form of debt securities, preferred stock, Class B common stock and warrants--are usually available at the time of the sale.

Viacom said in the filing that it intends to use the net proceeds from the securities sale for general corporate purposes, repayment of debts, working capital and capital expenditures. Representatives of the company couldn’t be reached to comment.

Viacom had $12.6 billion in long-term debt at the end of the third quarter.

The company agreed last month to buy BET Holdings, owner of Black Entertainment Television, for about $2.4 billion in stock and assumed debt. Viacom hopes to use its leverage to get more cable systems to carry BET.

In August, Viacom agreed to buy the 36% stake it didn’t already own of Infinity, its radio-broadcasting and billboard advertising unit, for about $15.5 billion in stock.

Viacom shares have fallen 22% so far this year on expectations that sales of advertising will slow. Company shares closed down $1 at $47.38 in Tuesday trading on the New York Stock Exchange.

Viacom is also considered a possible buy of Cablevision System Corp.’s Rainbow Media Group programming unit, Hyman said.

Rainbow, owner of American Movie Classics and other cable networks, could sell for between $3 billion and $5 billion, analysts have said.