Cooperman keeps shares moving

NEW YORK — Market rumors Wednesday of a possible marriage between CBS and Viacom buoyed shares of both companies, although insiders said any transaction would probably focus solely on Viacom’s TV station group.

Also moving the stock was an SEC filing by money manager Leon Cooperman, whose largest new position as of June 30 was a stake in Viacom worth about $47.6 million.

The stock didn’t react until late morning. It was weak when trading started, prompting Viacom chief Sumner Redstone to call several analysts and ask why. Queried about a possible CBS deal, Redstone apparently said only that those rumors have been around for a while — which is certainly true, and clearly not a bad thing for Viacom stock.

He told others he wouldn’t sell for under $100 a share — an impossible premium given the stock’s current level of $33.

Still, CBS insiders dismissed highly speculative news reports that CBS could buy Viacom, or vice-versa. They did note that Viacom’s station group has become extremely attractive since the FCC eased restrictions on TV station ownership earlier this month.

Given certain conditions — mainly, a big enough market — a company can own two stations in the same market. And only one of the two counts toward the current 35% cap on national coverage.

Spokesmen for both Viacom and CBS said they don’t comment on rumors or speculation.

Viacom’s stations are mostly affiliates of the struggling UPN netlet, which Viacom owns jointly with Chris-Craft. Since FCC regulations still forbid one company to own two broadcast networks, an outright combination of CBS and Viacom is impossible unless UPN disappears. That’s an event industry players and Wall Streeters have been half anticipating for months as the netlet falls further behind its rival, the WB.

One fund manager envisioned Viacom’s buying up the Chris-Craft station group and its interest in UPN. Viacom could either keep the network or, more likely, disband it, then turn around and sell all the stations to CBS or another interested party. He thinks Viacom’s stations alone could fetch $2.2 billion. “With all that cash, Viacom could go into total share repurchase mode,” he said.

However, it’s hard to find a perfect fit in a station group merger. CBS is already pretty much at the 35% national cap, so it could only add stations in markets where it already has one. And those markets would have to be big ones. Clearly, not all the Viacom stations fit the bill and some would have to be sold separately.

Viacom shares ended up $3.13 at $33.06. CBS rose $2.25 to $50.

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