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Viacom (VIAB) Expected to Cancel Paramount Stake Sale Plan

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According to media reports, Viacom Inc. is likely to abandon plans to sell stake in Paramount Pictures. Reportedly, the company is no longer interested in finding a potential investor for the stake as it considers the unit to be a key asset. The report also mentions that the stake sale might still happen at a later date. However, there has been no information from the company on this matter.

Initial Plan on Sale

The sale of a minority stake in Paramount had been proposed by the previous Chief Executive Officer (CEO) of the company, Philippe Dauman, who resigned in August this year. The move had been seen as part of Dauman’s strategy to reduce the company’s huge balance sheet debt of around $12 billion. The stake sale, per some reports, could have generated around $4 billion in after-tax proceeds. Dauman, who continued as the Non-Executive Chairman of the Viacom till Sep 13, was expected to table the suggestion of the Paramount stake sale to Viacom’s reshuffled board of directors before stepping down.

Corporate Changes at Viacom

Last month, National Amusement Inc. (NAI), which is Viacom’s major shareholder and is run by Sumner Redstone and his daughter Shari Redstone, reached an agreement with the company pertaining Dauman’s resignation as CEO and President. This agreement came after the corporate battle between the Redstones and Dauman continued for a few months. It was speculated that under Dauman, Viacom, which currently carries a Zacks Rank #5 (Sell), was unable to revive growth and boost revenues. The board of Viacom, which met last week, is expected to have had discussions on major decisions such as budget and capital structure. However, the company is yet to disclose whether any decision has been taken.

The company has faced intense competition in the past from other media giants such as The Walt Disney Co. (DIS - Free Report) , Liberty Media Corp. and Time Warner Inc. . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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