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ViacomCBS Inc Class B VIAC

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Morningstar’s Analysis

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ViacomCBS Shares Tumble Due to Equity Raise; Proceeds to Be Invested in Paramount+

Neil Macker, CFA Senior Equity Analyst

Analyst Note

| Neil Macker, CFA |

ViacomCBS capped a tumultuous week with a 25%-plus share price decline on March 26, resulting in a five-day drop of more than 50%. The decline was sparked by the March 22 announcement of an equity raise in the form of Class B common shares and mandatory convertible preferred shares. The offering priced on March 24 for total proceeds of roughly $2.6 billion to the firm in exchange for a total number of shares equal to about 5% of those currently outstanding. The instant arrival of 20 million new shares appears to have sparked an investor sell-off as the likelihood of a short squeeze has decreased. We applaud management’s foresight to raise capital by selling at what we viewed as inflated prices. We are maintaining our narrow moat rating and $57 fair value estimate.

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Company Profile

Business Description

ViacomCBS is the recombination of CBS and Viacom that has created a media conglomerate operating around the world. CBS' television assets include the CBS television network, 28 local TV stations, and 50% of CW, a joint venture between CBS and Time Warner. The company also owns Showtime and Simon & Schuster. Viacom owns several leading cable network properties, including Nickelodeon, MTV, BET, Comedy Central, VH1, CMT, and Paramount. Viacom has also built several online properties on the strength of these brands. Viacom's Paramount Pictures produces original motion pictures and owns a library of 2,500 films, including the Mission: Impossible and Transformers series.

1515 Broadway
New York, NY, 10036
T +1 212 258-6000
Sector Communication Services
Industry Entertainment
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type Slow Growth
Employees 26,340