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SAN FRANCISCO (AFX) - Investors gave a hearty endorsement to Viacom's split into two publicly traded entities Tuesday morning, with CBS stock soaring as most media stocks closed higher.
Both issues of the newly-traded CBS Corp. were up. CBS rose 70 cents, or 2.8%, to close at $26.20, while the Class A issue rose $1.05, or 4.2%, to close at $26.15.
The CBS spinoff was completed over the weekend. Early Tuesday, Prudential Equity Group started coverage of CBS at overweight and put a $30 target price on the shares, citing what the brokerage called a "compelling" valuation opportunity.
Elsewhere, Time Warner , under pressure to pursue a similar breakup, rose 21 cents to $17.65.
Dow Jones & Co. said Tuesday that Chief Executive Peter Kann will step down on Feb. 1, to be replaced by Richard Zannino, currently the chief operating officer, who will become the news-publishing company's first non-journalist to rise to its CEO post.
Dow Jones is the parent company of The Wall Street Journal and MarketWatch, the publisher of this report.
The company also raised its fourth-quarter profit outlook, citing improved results at The Wall Street Journal and at its electronic publishing segment.
Shares of Dow Jones jumped almost 13% as brokerage analysts generally praised the news. The stock closed at $39.14, up $3.65, on heavier-than-normal volume of more than 3.4 million shares.
Other newspaper stocks began the new year higher, with gains for Belo Corp. , Gannett Co. , Knight Ridder , Tribune Co. and New York Times Co.
Credit Suisse First Boston analyst William Drewry told clients that the newspaper group's 24% stock decline in 2005 could be blamed on excitement surrounding pure Internet companies like search giant Google and online classified rivals like craigslist.
"We think both competitors are to be taken seriously, but do not believe the case of secular impairment of the newspaper companies is as draconian as current sentiment would suggest," Drewry said.
The analyst pointed to the continued strength of newspaper publishers' online classified products, which have been among the few areas of growth for those companies. "Likely there will be some winners and some losers, but for the most part, we think the local focus of the newspaper's classified content will be sufficient to defend share," he said.
Drewry still cautions that the stocks could go lower in 2006, due to anemic advertising and circulation growth. Investors will watch the bid process for Knight Ridder, which put itself on the block last year, but in Drewry's view, the sale of the company probably won't lead to a wave of consolidation in the industry.
Liberty Media's Starz Entertainment Group unveiled Tuesday an Internet downloading service that will give users access to movies, music concerts and other content for a $9.99 a month subscription.
The new service, called Vongo, will let subscribers play back video content on Windows-based PCs, laptops, and certain handheld media devices, as well as television. It is available as of Tuesday in beta form at www.vongo.com. Liberty Media fell 6 cents to close at $7.81. This story was supplied by MarketWatch. For further information see
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