While MySpace Falters, Analyst Friends Viacom

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Analyst Richard Greenfield of BTIG Research points out the irony that while News Corp. is slashing jobs to keep MySpace from collapsing into social media oblivion, Viacom and its MTV Networks group are soaring in the vibrant cable TV market.

In a research note Friday, Greenfield recalls that investors flayed Viacom for not buying MySpace in 2005. Viacom CEO Tom Freston—a revered MTV veteran—lost his job in part because it appeared he let Rupert Murdoch steal what was then a hot site out from under him.

At the time, it seemed that as the value of MySpace rose, ratings for MTV dropped, because according to the popular wisdom, MTV was losing its cool with the kids to the Internet and social networks.

With shows like MTV’s Jersey Shore and The Game on BET, Viacom’s cable networks have bounced back, leading Greenfield to observe that “for some reason when an Internet site loses its momentum, it simply collapses with the odds of recover slim-to-none, whereas in the television world, there appears to be a natural ebb and flow of creativity that goes through multi-year cycles.”

Bottom line: Greenfield is raising his estimate for Viacom’s 2011 and 2012 earnings, as well as his target price for the company’s stock. He expects earnings per share for fiscal 2011 to be $3.53, up from his previous estimate of $3.40 and above the Wall Street consensus of $3.32. He pegs 2012 EPS at $4.05, which compares to a consensus figure of $3.76.

His target price is $50 a share. Viacom was trading at $41.24 Friday morning.

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