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Viacom, CBS up on M&A rumors as investors buck advice on other TV names

Media and communications stocks generally enjoyed a bull runduring the week ended Sept. 30, evidenced by a 1.6% boost in the SNL Kagan NewMedia Index and a 2.3% jump in the SNL Kagan Media & Entertainment Index.

Driving the bullishness were some familiar names as well assome companies less often cited for market-moving news.

Looking to the familiar, as the dust settles from thecorporate drama that has defined ViacomInc. in recent months, television investors could have a newlycombined entity to consider.

National Amusements Inc., the owner of a majority ofCBS Corp. and ViacomInc.'s voting stock, in a Sept. 29 proposal recommended a potential merger between the twocompanies. Asking the companies' boards to take conduct its due diligence,National Amusements proposed an all-stock transaction.

But in lieu of a deal between CBS and Viacom, it seems therewill not be many other strategic alternatives for Viacom to consider. NationalAmusements made clear that it will not accept or support any acquisition ofeither company by a third party or any transaction demanding the holdingcompany to surrender its controlling position in either company or a combinedcompany.

Investors appreciated the potential for "synergies thatwould allow the combined company to respond even more aggressively andeffectively to the challenges of the changing entertainment and medialandscape," as National Amusements described it. They bid CBS shares up6.6% for the five trading days ended Sept. 30. Viacom shares also got a 7.0%boost.

Two other TV names saw substantial swings as investorsbucked the advice of a prominent analyst.

Analyst Michael Nathanson of MoffettNathanson Researchdowngraded and Scripps Networks InteractiveInc., saying cable network operators without a substantial stake inlive programming are losing value in an increasingly over-the-top video market.He pegged both names with "sell" ratings, down from "neutral."

Besides the shift of linear television viewing to liveprogramming, the analyst also noted decelerating advertising and affiliate feegrowth due to several factors, including "cord cutting, the emergency ofgreat tier-ing, mix shift among distributors from higher-paying to lower-payingsubscribers, and the impact of MVPD consolidation."

However, investors were not persuaded and instead increasedstakes in Discovery and Scripps by 3.8% and 3.5%, respectively.

Turning to digital media, online travel agency saw its sharescatapulted above its 200-day moving average during the week.

The move for Expedia seemed to be precipitated by PARCapital Management, which reported an increased stake in the company. That fundholds 7.10 million shares of the company, a sturdy 5.2% of the stock's float,Insider Monkey reported.Previously, PAR Capital reported a stake of about 6.55 million shares.

Investors followed suit, adding 6.6% to Expedia's market capover the week. The gains catapulted Expedia shares above their 200-day movingaverage of $110.66, NASDAQreported, closing the week out at $116.72.

Lastly, in the world of local search, got a bump during the weekas well.

The company on Sept. 22 converted from a dual-class voting structure to asingle-class structure, meaning it will convert its Class A and Class B sharesinto a single class of common stock, with both classes being converted on a1-for-1 basis.

The move democratizes the voting structure of the company,replacing a system of tiered voting powers to a one-vote-per-share system.

Typically favoring single-class structures, investorscottoned to the move and pushed Yelp shares up 7.2% for the week.