Viacom weighs selling minority stake in Paramount film unit
By Jessica Toonkel and Sai Sachin R
(Reuters) - Viacom Inc (VIAB.O: Quote) is considering selling a "significant" minority stake in its Paramount Pictures movie studio, Chief Executive Philippe Dauman said on Tuesday
In the face of weak advertising sales and poor ratings at its cable networks, investors have been urging Viacom to sell all or part of the movie studio, saying possible buyers include Chinese firms and tech companies looking to develop original content.
The entire studio, which Viacom says is in a rebuilding process after some high-profile failures, is worth $4 billion, Sanford Bernstein analyst Todd Juenger estimated this week. Viacom declined to say what percentage it might sell.
Dauman, who took on the role of executive chairman from 92-year-old majority owner Sumner Redstone earlier this month, is under pressure to revive Viacom's fortunes after the company missed Wall Street earnings estimates for the fifth straight quarter, sending its stock down more than 21 percent to a five-year low.
Mario Gabelli, the second-largest owner of Viacom voting shares, has suggested Alibaba Group Holding Ltd (BABA.N: Quote) as a partner. Activist investor Eric Jackson, whose firm SpringOwl Asset Management has a small Viacom stake, has called for a sale of a Paramount stake to Alibaba or to Amazon, one of many tech companies expanding into developing original movies and shows.
Alibaba declined to comment.
A Chinese firm would be a likely buyer, analysts and investors said. Hollywood studios are also eager to work with Chinese companies to help get their films distributed in China, which limits the number of foreign films allowed into the country each year. China is the world's second-largest film market.
Chinese property and investment firm Dalian Wanda Group agreed in January to acquire a majority stake in U.S. movie studio Legendary Entertainment. Continued...