As Media Space Consolidates, Lionsgate Well Positioned As Either Predator Or Prey

Against the backdrop of a consolidating media industry, Lions Gate Entertainment Corp. (USA) LGF appears to be “a better de-leveraging story” than Viacom, Inc. VIA, Rosenblatt Securities’ Alan Gould said in a report.

He added that Lionsgate also seemed “well positioned as predator or prey.”

As The Media Space Consolidates

Viacom’s shares have surged year-to-date, up 28 percent versus 8 percent for the large-cap media conglomerates and 5 percent for the S&P 500. The company has enjoyed significant investor interest.

Gould pointed out, however, that the anticipated turnaround at Viacom’s entertainment division may take longer than what the Street is expecting. During this time, media network profits would continue to slide.

Related Link: Sifting Through Lions Gate's One-Time Expense Items Reveals Pretty Solid Q3

“We recognize that the Street will give new CEO Bob Bakish a “pass” for at least the first few quarters,” the analyst wrote. He added, however, that the current consensus expectations appeared too high.

Gould mentioned that he preferred both Lionsgate and CBS Corporation CBS to Viacom. While CBS had the “highest projected growth rate in the group,” Lionsgate could be involved in M&A, either as an acquirer or as a target.

Rosenblatt Securities has a Buy rating and price target of $32 for Lionsgate, and a Buy rating with a price target of $80 for CBS. Gould maintains a Neutral rating on Viacom, with a price target of $45.