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Below is reprinted from, basically saying that Westinghouse asbestos litigation has carried over into Viacom via successor liability. Don't know what to make of it.

"Mr. Buffett, have I got a company for you!? It has billions in revenue, great brand names, fantastic managers and, best of all, it has the taint that seems to scare all but you away: asbestos liability. The company is Viacom (VIA:NYSE - news).

Of course, people don't think of Viacom as having an asbestos taint. In fact, all of the research I have ever read about Viacom never mentions the problem. I would not even have known it if I hadn't queried readers about why Viacom's stock seemed suddenly so volatile. One of our number, Neal, sent me this terse message: "Viacom has become a wild stock because, believe it or not, the company may have asbestos worries from the old Westinghouse unit. Their bonds have widened vs. treasuries." (In English, their bonds are trading lower than they should be -- higher interest rates -- given their relative coupons.) But the problem is there. Big time.

Sure enough, in looking at the Commitments and Contingencies section of the Viacom public filings, I came across this bit of toxic news: "At Sept. 20, 2000, the company has approximately 140,872 unresolved claims pending." A quick check of last year's documents shows that it "only" had 115,650 unresolved claims. The documents from 1998 show 105,000 unresolved claims, so this number has grown, not shrunk. Grown huge, I might add, vs. the other targets of this kind of litigation.

So what, you say? The suits are from something that Westinghouse, not Viacom and not CBS, did before the '70s. The company never manufactured or produced asbestos. Further, Viacom says, "Management believes that any ultimate liability resulting from those actions or claims will not have a material adverse effect on the Company's results of operations, financial position or liquidity."

All well and good.

Except that is what I have heard Eagle-Pitcher, Keene, Owens Corning, Owens Illinois and Armstrong World say or state at one time or another. It is what we heard from Crown Cork and from Federal Mogul and from Grace , and you need microscopes now to find those stocks. It is what drove down USG into the teens, before Warren Buffet stopped the decline with this purchase. It is what everyone says about asbestos claims. I wonder how the lawyers let everybody get away with such benign language when members of their brethren have been systematically bankrupting companies for years.

Oh, and by the way, none of them had the sheer number of claims that Viacom has against it. With advertisements running daily to drum up more plaintiffs, lawyers should keep the claims running high well into the millennium.

As we learned in today's Wall Street Journal, "Firms Hit by Asbestos Litigation Take Bankruptcy Route" when it gets too hard. Not good news for the common stocks holders!

Of course, I think that Buffett is right. I think this kind of litigation creates bargains. I am also quite confident that one of the first things George W. Bush does is put an end to the ability of the Plaintiffs' Bar to destroy perfectly good companies. I know from personal experience this was not a focus of the Clinton administration, having been at a White House Coffee where one of the bar's members asked for special pleading and seemed to get a warm reception from the current president, much to my chagrin. Bush, however, has spoken publicly against these vultures and maybe that's what Buffett is betting on, too.

But the bargains have to be created first. And they will be when the analysts compare the fine print of Viacom's financials to those of Owens Corning and USG and Armstrong and Federal Mogul and Grace and Crown Cork and Owens Illinois and any of the other embattled targets of endless asbestos litigation."
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