Viacom Q3 income falls, beats estimates
Viacom, the media company that owns Paramount Pictures, Nickelodeon and MTV, said Thursday its fiscal third quarter net income sank 27% following a decline in its cable networks’ advertising sales and affiliate revenue, triggering a call for new leadership from the company's largest shareholder.
Viacom's net income totaled $432 million vs. $591 million a year ago. But earnings per share, after excluding some items, were $1.05, beating the $1.02 estimated by analysts who were polled by S&P Global Capital Intelligence.
Shares of Viacom, whose holdings also include VH1, Comedy Central and BET, fell 2.3% in morning trading to $43.
Viacom's future is as murky as management turmoil
Total revenue rose 2% to $3.1 billion as a revenue gain at Paramount, stemming from higher license fees from video-on-demand distributors and the box-office sales of Teenage Mutant Ninja Turtles: Out of the Shadows, helped offset a fall in the cable networks unit.
Viacom's latest earnings will be heavily scrutinized by analysts and investors as the company's chairman and CEO, Philippe Dauman, continues to fight efforts by key controlling shareholders — former chairman Sumner Redstone and his daughter, Shari Redstone — to oust him from his job. National Amusements, the privately held theater company owned by the Redstone family, controls 80% of Viacom's voting stock.
National Amusements issued a statement saying a "change of leadership" is needed.
"In recent years, the company’s senior management has overseen a steep erosion of revenue growth, earnings, operating performance, financial capacity and shareholder returns—with Viacom ranking at or near the very bottom of industry peers," the statement says. "At the same time, there has been a significant exodus of creative and business talent."
Earlier this year, Sumner Redstone, 93 and in poor health, removed Dauman from his trust that would control his business interests when he dies or is declared incapacitated. Redstone and his daughter also filed legal papers to try to remove Dauman and four others from Viacom's board, saying the company needs new management to reinvigorate its businesses.
In his counterclaim, Dauman has argued that Shari Redstone is unduly influencing his father and is behind the moves to regain control of Viacom. The lawsuits are ongoing.
"In the quarter, Viacom continued to execute on our strategic plan by increasing investment in high-quality original content, enhancing our connection to audiences, accelerating the growth of data-driven advertising products and further expanding our unmatched global reach," Dauman said in a statement Thursday.
Viacom CEO Dauman, board member Abrams removed from Redstone's trust
The media networks, which operates its cable networks, reported a 3% revenue fall to $2.51 billion. Domestic advertising sales sank 4% despite pricing increases as ratings at some of its networks were "softer," the company said. International advertising sales increased 13%.
Affiliate revenue, paid by pay-TV operators to carry its networks, decreased 10%, reflecting its ongoing challenges in negotiating with cable and satellite TV companies. But international affiliate revenue rose 9%.
Ratings at its networks have been sluggish in recent years, prompting some cable companies to drop them and stirring criticism from analysts that Viacom lacks creative power. But Dauman said Thursday ratings increased at Nickelodeon, Nick at Nite, VH1 and TV Land.
Viacom may sell 'significant' minority stake in Paramount Pictures
Revenue at the filmed entertainment unit, which operates Paramount, rose 30% to $621 million. Box office revenue more than tripled from a year ago to $91 million due to the June release of Teenage Mutant Ninja Turtles: Out of the Shadows. Viacom is in talks to sell a significant minority stake in Paramount to raise funds to pay off some debt and fund other operations.
License fees paid by video-on-demand services were up 39% to $297 million. Home entertainment revenue, which includes DVD sales and in-home movie purchases, fell 4% to $192 million.
Follow USA TODAY media reporter Roger Yu on Twitter @ByRogerYu.