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Will The Return Of The Pandemic Boost ViacomCBS?

Paul Franke profile picture
Paul Franke


  • ViacomCBS is basically selling for the same price as late 2019, despite wild swings lower and higher since my last bullish article.
  • The company is making solid progress in rolling out several streaming services the past few years.
  • Strong and improving earnings and free cash flow have appeared in 2021.
  • The company is clearly a takeover target after Sumner Redstone's passing last year.

Television streaming, multimedia wall concept
simpson33/iStock via Getty Images

It’s been a wild two-year ride for ViacomCBS (VIAC) (VIACA) through the 2020 pandemic and subsequent recovery. Believe it or not, the stock has ended up at the same starting price as late 2019! (The whole U.S. stock market could

This article was written by

Paul Franke profile picture
Nationally ranked stock picker for 30 years. Victory Formation and Bottom Fishing Club quant-sort pioneer.....Paul Franke is a private investor and speculator with 36 years of trading experience. Mr. Franke was Editor and Publisher of the Maverick Investor® newsletter during the 1990s, widely quoted by CNBC®, Barron’s®, the Washington Post® and Investor’s Business Daily®. Paul was consistently ranked among top investment advisors nationally for stock market and commodity macro views by Timer Digest® during the 1990s. Mr. Franke was ranked #1 in the Motley Fool® CAPS stock picking contest during parts of 2008 and 2009, out of 60,000+ portfolios. Mr. Franke was Director of Research at Quantemonics Investing® from 2010-13, running several model portfolios on the Covestor.com mirror platform (including the least volatile, lowest beta, fully-invested equity portfolio on the site). As of April 2023, he was ranked in the Top 5% of bloggers by TipRanks® for stock picking performance on positions held one year. A contrarian stock picking style, along with daily algorithm analysis of fundamental and technical data have been developed into a system for finding stocks, named the “Victory Formation.” Supply/demand imbalances signaled by specific stock price and volume movements are a critical part of this formula for success. Mr. Franke suggests investors use 10% or 20% stop-loss levels on individual choices and a diversified approach of owning at least 50 well positioned favorites to achieve regular stock market outperformance. The short sale of securities in overvalued, weak momentum stocks as pair trades and hedges is also a part of the Victory Formation long/short portfolio design. "Bottom Fishing Club" articles focus on deep-value candidates or stocks experiencing a major reversal in technical momentum to the upside. "Volume Breakout Report" articles discuss positive trend changes backed by strong price and volume trading action.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in VIAC over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This writing is for informational purposes only. All opinions expressed herein are not investment recommendations, and are not meant to be relied upon in investment decisions. The author is not acting in an investment advisor capacity and is not a registered investment advisor. The author recommends investors consult a qualified investment advisor before making any trade. This article is not an investment research report, but an opinion written at a point in time. The author's opinions expressed herein address only a small cross-section of data related to an investment in securities mentioned. Any analysis presented is based on incomplete information, and is limited in scope and accuracy. The information and data in this article are obtained from sources believed to be reliable, but their accuracy and completeness are not guaranteed. Any and all opinions, estimates, and conclusions are based on the author's best judgment at the time of publication, and are subject to change without notice. Past performance is no guarantee of future returns.

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Comments (46)

sschimmel profile picture
Top Gun: Maverick, Release - November 19, 2021
I want to buy but not sure which shares???
@Happyfingers typically (lacking a specific reason to discriminate) you'd want $VIAC, VIACOMCBS INC CL B. Not required, but if you want to learn more about "class B" shares, check out:

A Quiet Place 2 will help VIAC beat estimates!
ijeff profile picture
Looks like I jumped the gun a bit. Much better buy today than a few days ago.
Looks like media stocks are reacting to Discovery subscribers concern. As VIAC market cap is smaller, movement is exaggerated.
Thanks for the article ! I thought today’s share price provided a nice entry or add-on point
Excellent analysis. Especially the presentation of material and product lineup.

Is there a reason you did not address the two major revenue streams/segments of cbs sports production and movie production that is being hampered by covid pandemic?
cplui profile picture
@Paul Franke Mahalo for the great article... sold half of my wife's shares on covered calls @ $77 and she was disappointed at first when it went up to $100. Now the stock is a bargain again, sold some puts $35 strike
Paul Franke profile picture
@cplui You are smarter than me.
cplui profile picture
@Paul Franke ha ha...lucky timing
Great article Paul, love your work as always. Bought some more VIAC today.
Long at 40, buying the short term drops. Hoping for a buyout at 70+
hh77 profile picture
03 Aug. 2021
AMZN, AAPL or GOOGL creates a new division. Hires Iger (retiring from DIS in 12/2021) and gives him complete control. Iger uses his entertainment network connections to acquire management talent and buys VIAC to access movie studio.

Paul Franke profile picture
@hh77 Disney's Iger?
Paul Franke profile picture
VIAC is also an interesting buy idea for Warren Buffett.

If he wants a TV network and streaming assets cheap. He has the cash laying around at Berkshire earning nothing for interest returns.
hh77 profile picture
03 Aug. 2021
@Paul Franke i corrected.
Many stocks with no earnings or dividends do well, and others with both earnings and dividends are dead in the water. Whoever said Wall Street is irrational was correct.
People need to say the heck with these lockdowns and to heck with mask mandates. Over forty percent of our small businesses are not re-opening from the first lockdown. All it did was prolong the inevitable, kill small business and prosper big corps. Enough is enough. All we need to say is, "NO MORE".
why sharp drop today?
What's with the 5% drop today?
@GreedySOB Will we see 5% dividend yield?
We have been speculating VIAC buyout deals for a while now and nice to think about who and when... I'm happy to wait to see when there is an actual offer...
Thanks for the article, VIAC getting whacked today, anybody hear anything? All I saw is declaring $.24 div in line with previous.
Pitnick profile picture
@fujilomi Seems like TV/movie stocks are getting killed generally. LionsGate, AMCX and Discovery are also way down. Not sure what's up.
@fujilomi Stocks showing mostly in the red this AM...not to worry, VIAC earnings due tomorrow??? Has to be a good one !!!
@Pitnick Thanks, not really following the other stuff so was very surprised.
SJ09 profile picture
As stated by LongBullPlus, a non-cash offer by Netflix would probably not be attractive.
Paul Franke profile picture
@SJ09 To ViacomCBS shareholders? You don't want to be a Netflix holder with solid free cash flow well into the billions yearly, a far lower Netflix P/E and PEG ratio with all kinds of synergy possibilities. What is your price in a takeover to vote yes? $70, $80, $90 vs. $41 quote today?
LONGBULL+ profile picture
Netflix buying VIAC:

guess it could not happen

Netflix does not want to be in advertising

For almost as long as Netflix (NASDAQ:NFLX) has had a streaming service, investors and analysts have asked if the company will get into advertising. Every time, Netflix has always given the same answer: hard pass.

Netflix CEO Reed Hastings appreciates the simplicity of the streamer's business model, seeing its simple value proposition as a strength. From a consumer perspective, it's very easy to understand how Netflix works. You pay a monthly fee, and you get all the entertainment you want with no ads. He also seems to think advertising would distract from the company's focus on pleasing customers, and potentially attract controversy over data collection, as he said in the earnings call in January 2020. He also believes that competing with ad heavyweights like Alphabet's Google and Facebook would be difficult, as Netflix would have to essentially take market share from them.


Netflix CEO Reed Hastings said in a new interview that the reason the streaming giant doesn't have commercials isn't because of a philosophical stance, it's because it's the "best capitalism."Making money from ads is hard to do, the CEO said, and highly competitive.Hastings said Netflix isn't considering live TV add-ons like Hulu either, as "every content dollar is spoken for

So VIAC is making money via advertising.

Also they have cable networks which is no core product business for Netflix.

The share price of Netflix is overpriced compared to that of WBD.

So will Redstone sell to Netflix?

Not likely.
LONGBULL+ profile picture
txs for the article Paul.

VIAC is in a great financial position I agree.

But a take over is not likely.

FAAG: the FTC/FCC will not allow it.
I even doubt Amazon and MGM merger will happen.
So buying VIAC which is so much larger than MGM -not likely.

by Netflix - also will not happen
In the recent CC they stated they will NOT do acquisitions and see no companies they would like to buy.
Besides why would Redstone agree to be paid in overpriced Netflix shares? Is that a great deal for Redstone guess not. Netflix great growth story is over.

by Comcast
Will also not happen, not possible because of antitrust regulations.

The only one who could do it is the new WarnerbrosDiscovery but after mid 2022. Only if growth numbers for WBD struggle and guess in 2024 when debt levels for WBD have returned to acceptable and the contract Bakish has with VIAC expires.
LONGBULL+ profile picture

Hastings said he did not believe the consolidation had affected Netflix’s growth trajectory and said there were no deals in the works for his company.

“While we are continually evaluating opportunities, we don’t view any assets as ‘must-have’ and we haven’t yet found any large scale ones to be sufficiently compelling to act upon,” he said
Paul Franke profile picture
@LONGBULLPLUS Perhaps. But if someone else acquires CBS, Netflix has few options left (FOX) to get a major network and top-rated live programs at a reasonable cost. Clock is ticking.

The PlutoTV idea is also an interesting angle, as Netflix could throw some movies and shows on this streaming effort to grow it faster.
LONGBULL+ profile picture
Those initial meetings paved the way to more wide-ranging conversations about other ways the two media companies might work together — talks that sources say could lead to some combination of Comcast’s NBCUniversal unit and ViacomCBS. No formal offers have been made

“Brian’s a serial acquirer — and he’s far from done,” said one longtime Hollywood investor. “It wouldn’t surprise me if he spun off NBCUniversal and merged it with Shari’s stuff

“The handwriting’s on the wall,” said the Hollywood investor. “There’s going to be more consolidation. The world’s going to evolve into six or seven players in the streaming business. They’re all going to be vertically integrated

Roberts could spin out NBCUniversal and merge with it ViacomCBS — similar to the WarnerMedia-Discovery deal. That might require him to give up control of NBCUniversal. If Redstone ends up owning more economic control of a merged NBCUniversal-ViacomCBS, she may want to run the company or choose who’s in charge, for at least a number of years. Roberts and Redstone would have to reach an agreement on economic and voting control if this option is pursued.

“It wouldn’t shock me if later this fall, we got back into a discussion of whether there’s anything more that we can do together,” said the source, who spoke on condition of anonymity

That conversation, which involved Comcast CEO Brian Roberts, ViacomCBS Chairwoman Shari Redstone and CEO Bob Bakish, led to a broader discussion of whether there were other strategic possibilities, from a Hulu-styled streaming joint venture to a more comprehensive tie-up, sources tell Forbes

For now, the companies will likely focus on bundling both services to improve their reach in international markets, as first reported by The Wall Street Journal, but remain interested in the possibility of a broader alliance.
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