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Wall Street isn’t sold on a CBS-Viacom merger

The media world may be buzzing about a potential CBS-Viacom merger, but Wall Street isn’t sold on the idea.Despite CBS’s relatively upbeat fourth-quarter results last week, the broadcaster’s stock slipped 2.4 percent on Friday, to $55.39.In fact, shares are down 5.8 percent since they initially popped on Jan. 12 on the first reports that it and Viacom were again talking merger.Viacom shares are down less than 1 percent over that period, slightly better than the S&P 500 index, which is off 2 percent.“The Viacom deal is leaning on [CBS],” said Needham & Co. media analyst Laura Martin. “I think people who own CBS stock, who really bought into the unique assets … don’t like the idea that CBS is going to buy a dozen cable networks.”

The Tiffany Network’s current strategy of focusing on growing direct-to-consumer services is gaining traction.During the conference call after the bell on Thursday, Chief Executive Les Moonves pointed to the success of CBSN, its news streaming product, as a model for its upcoming CBS Sports and “Entertainment Tonight” streaming services.“We believe we can build a significant audience by launching an ad-supported free service with full mobile and on-demand capabilities,” Moonves said.More importantly, we’re setting ourselves up for the direct-to-consumer future with another vertical that is right in our wheelhouse,” he added.CBS recently inked deals with Hulu, DirecTV Now, Sony PlayStation Vue and YouTubeTV and has reached about 5 million subscribers for CBS All Access and Showtime combined — and predicted it would hit the 8 million mark by 2020.

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