Viacom shares surge over Karmazin buzz

S&P puts 'Hold' on stock as exec's fate awaited

By JILL GOLDSMITH, MEREDITH AMDUR

Karmazin

Viacom shares vaulted as much as 5% during Wednesday trading as rumors soared that a signed contract with Mel Karmazin was imminent.

A Viacom spokesman declined to comment.

Karmazin told people earlier this week he was hopeful that a deal was close. But "it wasn't in writing yet," noted one Wall Streeter. "With Sumner, it's got to be in writing."

Analysts and money mangers want the execs to put an end to the speculation next Wednesday when Viacom announces financial results and hosts a conference call with Redstone and Karmazin. "People will be really disappointed if they get on the call and just talk about earnings expectations for next year," said one fund manager.

No deadline

But a person close to Viacom stressed that there's no internal timetable and said "the priority for both Mr. Redstone and Mr. Karmazin is to get it right and take as much time as necessary to do that."

While market speculation Wednesday touched on the possibility that Karmazin would sign only a short-term contract, that eventuality seems implausible given the time and effort being devoted to negotiations.

Karmazin's contract expires at the end of the year, and he has pledged to remain until then.

The Viacom board met Wednesday to discuss an assortment of issues, but by the end of the day -- and with no announcement forthcoming -- Viacom stock settled back up a more humble 0.6% rise to close to $37.25.

S&P sez hold

The heavy buying prompted Standard & Poor's to weigh in with a "Hold" on Viacom's class B shares, citing continued uncertainty over Karmazin's contract renewal and the continuing delay in resolving the executive issues.

The big issues dogging a settlement are power sharing and operating control between Redstone and Karmazin.

Whisperings around the trading floor Wednesday were that the two execs had roughed out terms for a one- to two-year extension deal.

But a short-term contract won't necessarily resolve the bigger questions of succession at Viacom, and some investors hinted that the stock may see only a small fillip if and when a deal is announced that does not provide longer-term management details.