CBS Shares Drop Again as Board Considers Leslie Moonves’ Fate
By Cynthia Littleton
LOS ANGELES (Variety.com) – CBS shares took another sharp dive Monday as investors weigh the fallout of sexual assault allegations leveled against chairman-CEO Leslie Moonves.
shares were down more than 4% in early trading, dropping to the $52 range. The company has shed more than $1.5 billion in value since Friday, when the New Yorker publishing a damning expose featuring accusations from six women about sexual misconduct involving Moonves.
The CBS board of directors is set to meet later today to consider its options amid the growing crisis. The board on Friday said it would initiate an investigation into the allegations made about Moonves and the culture of CBS in the New Yorker story by Ronan Farrow.
Wall Street analysts have been cautious about factoring the scandal into recommendations on CBS stock. CFRA Research media analyst Tuna Amobi dropped his opinion on CBS shares from buy to hold and noted the pressure on Moonves couldn’t come at a worse time, given the company’s pending lawsuit against controlling shareholder Shari Redstone.
“We see a particularly inauspicious timing for CBS, currently embroiled in a high-stakes litigation against National Amusements Inc. (NAI), its controlling shareholder under the direction of Shari Redstone, who might seek to exert further leverage under the current circumstances,” wrote Amobi in a note published Monday. “With Ms. Redstone already calling for a “thorough, open and transparent” investigation, we see potential far-reaching implications for CBS’s corporate governance and possible questions related to management succession.”
But Bernstein Co. analyst Todd Juenger kept his rating at outperform with a target price of $65.
“Our rating and target price are based on our longer term view of the value of the cash flows and strategic value of the underlying assets,” Juenger wrote. “It is likely the new risks regarding CBS management, on which it is impossible to predict the outcome or timing of resolution, could have negative impact on CBS shares in the near term.”
