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Analyst: Take Viacom Private

Pali Research media analyst Rich Greenfield kept the pressure on Viacom Inc., issuing a report last week imploring company chairman Sumner Redstone to take the media giant private.

It was the second critical research note Greenfield has written on Viacom this month. A July 10 note, among other things, called for Viacom CEO Tom Freston to resign if he couldn’t change the direction of the media giant.

Greenfield’s latest missive — “Dear Mr. Redstone — Take Viacom Private” — pulled no punches. It cited Viacom’s sluggish stock price, down 18% since the company split into CBS Corp. and Viacom Inc. in January, and an apparent aversion to risk. Greenfield said Redstone, who already controls 12% of Viacom stock, could buy the rest of the outstanding shares at a 15% premium ($38.50 apiece) and still enjoy a healthy return.

Better still, taking Viacom private would enable the company to invest in new distribution platforms for its content without worrying how Wall Street will react.

“The more we think about these issues and how Viacom stock continues to underperform the market, the more we think, 'Why isn’t Viacom a private company?’ ” Greenfield wrote. “Viacom management would then be free to run Viacom how they want, without worrying about public shareholders.”