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Stock Analyst Update

Viacom Turns to Radio with Infinity Buyout

Deal may boost cash flow, make media company a more solid investment.

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Viacom’s (VIA) bid Tuesday for Infinity Broadcasting (INF) is a positive long-term strategic move for the firm, even though it may be viewed by some as a knee-jerk reaction to News Corp.’s acquisition of Chris-Craft on Monday. By acquiring the rest of Infinity it doesn’t currently own, Viacom is moving in a markedly different direction than a deal with Chris-Craft (CCN) would have provided.

Viacom now seems to be changing its focus to radio. And the acquisition could expand growth in several areas, because Infinity has been growing at double the rate of Viacom’s radio and outdoor advertising business. Thus, a combination would further strengthen Viacom’s cash-flow position.

Steve Hahn does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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