Question

Shareholders are at war in CBS.

1. Is diluting the shares of CBS biggest shareholder a good or bad thing.

2. Why?

3. What are the benefits and or down falls from the potential merger with Viacom

Answer 1

ans 1 > diluting the shares of CBS biggest shareholder is bad thing.

ans 2> beacause this will reduce an existing investor's proportional ownership in that company of the biggest share holders.

ans 3>

benefits

1. Cost savings through eliminating same/ duplicate operations and increasing efficiency .

2. they will get distribution protection.

downfalls

1. merging CBS with Viacom will not create a more competitive media company as their both combine share would also be very less in the market.

2. Share price would not increase much as both companies shares are declining.