sumner dollarMedia analyst Rich Greenfield is very bullish on Viacom and much less so on CBS right now. He writes: “With Viacom shares trading at under 10x 2010E free cash flow, ratings on the rebound (at MTV and BET), the ad market improving globally, EPIX gaining distribution on the 3rd largest MSO (click here) and better than expected film results, we believe the stock is compelling at current levels. While we expect CBS shares to benefit from a meaningful positive swing in 2010 earnings (as local advertising recovers), we are less convinced about its prospects in 2011 and beyond – regardless of whether a sale becomes possible post-Sumner.”

That’s right: the media and analysts are talking about what happens after the demise of the Viacom old coot who turns 87 in May and repeatedly says he will live forever and has no interest in selling the key assets he controls. (Remember that his investment vehicle, National Amusements, owns his (voting) control stakes in both Viacom and CBS.) And while the details of the SMR (Sumner Murray Redstone) trust are a closely guarded secret (including the impact Sumner’s divorce from Phyllis Redstone had on the trust), a recent Boston Magazine article lifted the veil. Key points overall:

    • Sumner’s daughter Shari Redstone is set to succeed Sumner technically in running National Amusements and in turn, Viacom and CBS.
    • But her longevity in that role will be determined by majority vote of the SMR trust – which she unfortunately does not control.
    • Greenfield takes that to mean her chairwomanship will be “short-lived” at best.
    • The SMR trust has four members today: Shari and 3 lawyer friends of the Redstone family — Viacom CEO Philippe Dauman (who is also the executor of Sumner’s will and who is believed to be the closest person to Sumner personally), George Abrams (on National Amusements and VIA/B board), and David Andelman (on National Amusements and CBS board).
    • Greenfield says that, in the event of Sumner’s death, a fifth trustee is added from Brent Redstone’s (Sumner’s son) family – one of his two daughters (either Keryn or Lauren).
    • The SMR trust votes by majority rule. Even after adding a fifth member from Brent’s family, Shari Redstone would still be outnumbered by Dauman, Abrams and Andelman 3 to 2.
    • Greenfield believes Dauman “would be more than willing to entertain offers for Viacom in a post-Sumner world. Remember, Dauman (and Dooley) both ceded power when Viacom acquired CBS (with both paid handsomely to step to the sidelines)”.
    • Greenfield says this “increased clarity around the trust should be a positive for Viacom’s valuation”.