Even before COVID-19, the road has been a little bumpy for ViacomCBS since the company closed its long-awaited, $12 billion merger last December.
The company’s stock has lost more than half its value in the past few months. Bullish investors impressed by its reach and hefty cash flow have been outflanked by bears scrutinizing its scale and fretting about TV ratings erosion.
Heading into Thursday trading, however, the company’s stock is having one of its best weeks since it began trading. Shares closed Wednesday at $18.99, up 9% and the highest they have been since March 11. They have risen more than 21% since Monday.
Investors, as is often the case on Wall Street, appear to be rewarding news of cost-cutting at the company. Layoffs projected by insiders to be in the range of 500 to 700 people are under way across the organization, part of the drive to achieve $750 million in synergies from the deal. As Deadline reported earlier today, the Entertainment & Youth division has been among the first affected. The company has not commented beyond CEO Bob Bakish’s message to the troops that the reductions will help ViacomCBS “integrate and streamline” its operations.
On the company’s last earnings call in February, CFO Christina Spade said most of the anticipated cost savings would come from “from incremental opportunities across areas where Viacom and CBS have the most overlap – namely, duplicative organization areas, vendor sourcing and, to a lesser extent, real estate consolidation.”
Viacom and CBS spent six years under the same corporate roof before parting ways in 2006. After pursuing a merger, in fits and starts, for five years, the companies got their wish last year, closing an all-stock deal to bring together the two companies controlled by National Amusements.
The combined company will get the chance to make its case again to Wall Street on May 7 when it reports quarterly earnings. Clearly, the company is feeling some of the effects of COVID-19. Paramount Pictures is unable to release theatrical films or make films or TV series and advertisers are pulling back from TV networks, including CBS, which is making do without live sports.
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