Posted by chicagomedia.org on October 13, 2008 at 13:13:38:
CBS Shares Slip On Redstone Sell-Off
CBS shares were down more than 4% in mid-morning trading after Sumner Redstone’s National Amusements sold a 20% stake in the radio and television broadcast company to raise millions in order to pay down debt and meet credit covenants. Just before noon, some 7.8 million shares had been traded and the issue was down 30 cents at $7.80. On Friday (Oct. 10), CBS shares topped losers on the Radio & Records Index with a 20% decline in value, dropping $2.04 a share to $8.10.
A unit of the 85-year-old media titan’s holding company will sell the CBS and Viacom non-voting shares. It holds 46.8 million Class A voting and 23.4 million Class B non-voting shares in Viacom. It also holds the same amount of Class A shares in CBS and 39.8 million of Class B CBS shares.
This morning (Oct. 13), the company sold 7 million shares of Viacom class B (non-voting) common stock and 17 million shares of CBS class B common stock for $233 million, far less than the $400 million-worth of CBS shares the company said it would sell on Friday, notes Wachovia Capital Securities analyst Marci Ryvicker in a client note. The analysts added that it was unclear whether the block of shares was sold through private placement after Friday’s announcement or on the open market this morning. "We are waiting for confirmation from management," she noted.
As far as investing in shares of CBS goes, Wyvicker’s conclusion was “We are still cautious given the economic and advertising environment, but we believe this is a stock to watch given its cheap valuation; its apparently safe dividend (13% yield), and its significant free cash flow generation ($1.5 billion expected by year’s end.”
(Jeffrey Yorke, Radio & Records)