Viacom Stock Falls on Rumor of Buyback

Viacom International shares tumbled $4 Monday on the New York Stock Exchange amid late-day rumors that the entertainment company would buy out the stake owned by investor Carl C. Icahn, who is believed to hold about 17%.

A Viacom spokesman declined to comment on the buyback rumor. After the close of trading, however, one Wall Street source said the report appeared to be unfounded. Viacom shares closed at $68 as 838,300 shares were traded.

According to several sources, Viacom refused to buy back Icahn’s stake when it measured just under 5%. That refusal apparently spurred Icahn’s buying spree last week. Sources say the New York financier acquired about 2.5 million Viacom shares in a five-day period, but Icahn has not commented publicly.

Telephone calls to his office Monday were not returned.

Viacom executives huddled through the weekend with advisers, according to several sources, but made no announcements. Viacom spokesman David Fluhrer also declined to comment on whether the broadcasting and cable-TV concern has been notified of a Hart-Scott-Rodino filing.

Under federal antitrust law, an investor must notify both the company and federal antitrust agencies if he plans to acquire more than 15% of the company’s stock. Presumably, Icahn would have notified Viacom last Friday.

Separately, a group of investors led by JMB Realty executives in Chicago notified the Securities and Exchange Commission that last Friday it sold a block of 1.5 million Viacom shares, the equivalent of a 7.4% stake. It retains a 4.2% interest in the company. The purchaser was not disclosed, but Icahn was believed to have bought them.

John Sipple, a senior attorney at the Federal Trade Commission, said the antitrust agencies are barred by law from divulging filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. However, the attorney said, the act provides 30 days for a routine review, with additional time permitted if the agency needs additional information.