Stock of the two media companies controlled by ailing mogul Sumner Redstone rose after Redstone resigned as executive chairman of CBS.
Viacom stock was up nearly 10% in after hours trading following the announcement about Redstone Wednesday and a disclosure by Viacom that it was holding a board meeting Thursday.
Some reports indicate Viacom’s board will also vote to name a new chairman, succeeding Redstone. Viacom has been a laggard in the media sector and some investors are looking for signs that of a change in management. Replacing Redstone as executive chairman could be a story to that.
CBS stock was up more than 4% in after-hours trading.
“While we haven't confirmed the reasons for the transition with CBS's management team, we can't help but conclude that Mr. Redstone's declining health is to blame,” said Marci Ryvicker, analyst at Wells Fargo in a note late Wednesday.
Ryvicker noted the reports that Viacom’s board would elect a new chairman. “One thing to remember about Viacom - the issue is a bit more complex given CEO Philippe Dauman's position as trustee of Mr. Redstone's estate. In any case, the stock is clearly having a positive reaction,” she said.
Shari Redstone, vice chairm of Viacom and National Amusements, the Redstone family holiding company, said she wants Viacom to have an independent chairman, as opposed to giving the post to CEO Philippe Dauman.
Brian Wieser of Pivotal Research said the change at CBS, with CEO Les Moonves becoming chairman was a positive.
“The more significant implication is for sibling company Viacom, where changes at the top of the organization should lead to a rerating of the stock by many investors,” Wieser said. “While we think there is something to the notion that CEOs are paid to ‘see around corners’ and navigate their enterprises favorably through challenging environments, it’s doubtful that Viacom would have been in a much better position under any other circumstance or most other managers. Nonetheless, investors want the option of change.”