Viacom CEO Defends His Leadership -- 2nd Update
February 09 2016 - 2:13PM
Dow Jones News
By Keach Hagey and Lisa Beilfuss
Viacom Inc. Chief Executive Philippe Dauman fiercely defended
his leadership as the media company on Tuesday reported quarterly
results that stoked investor concerns and sent its shares
tumbling.
Revenue and profit declined in the December quarter, dragged
down by weak performance in Viacom's film and cable TV networks
segments. The company also missed analysts' expectations for
revenue and lowered its estimate for growth in subscription fees in
fiscal 2016 to "the low mid-single digit" percentage range, down
from previous guidance of "high single-digit" percentage
growth.
Viacom shares were down 13% in afternoon trading on the Nasdaq,
hovering around a five-year low.
On a tense conference call with Wall Street analysts, Mr.
Dauman, who last week was named media mogul Sumner Redstone's
successor as executive chairman, addressed the criticism of the
company as its stock dropped more than 40% over the past year.
"Our outlook and the facts have been distorted by the naysayers,
self-interested critics and publicity seekers," Mr. Dauman said.
"We will not be distracted or deterred as we build the bright
future ahead of us."
Mr. Dauman added that "Sumner and I have a more than 30-year
history side-by-side building his media empire. He and the board of
Viacom, believing in my abilities and character, have entrusted me
with weighty responsibilities, none of which are inconsistent or
incompatible."
Mr. Redstone, who Viacom executives said was listening in on the
call from Los Angeles, is still the controlling shareholder of
Viacom, with 80% of voting shares. He is also the controlling
shareholder of CBS Corp.
Some of Viacom's critics on Wall Street have argued the
company's board isn't sufficiently independent and that replacing
Mr. Dauman, who is one of the most richly compensated executives in
the industry, would boost the company's stock. Viacom has vouched
for its board's independence.
When pressed by an analyst on what qualities the board saw in
him and his performance to merit his new role, Mr. Dauman said that
"some of the [stock] decline in the recent past was accentuated by
a lot of noise that surrounded us." He declined to elaborate but
added, "I think it's obvious to everybody what the noise is."
Viacom's results come amid unprecedented stress on the pay TV
business fueled by the rise of streaming media and cord-cutting.
Mr. Dauman said the company has tried to adapt to "significant
industry disruption" with investments in content and technology.
The latest example was a deal announced Tuesday with Snapchat Inc.
under which Viacom will sell advertising against the
vanishing-messages app company's owned and operated content.
In the most recent quarter, Viacom reported a profit of $449
million, or $1.13 a share, down from $538 million, or $1.20 a
share, a year earlier. Excluding certain items, earnings per share
fell to $1.18 from $1.29.
Revenue slid 5.7% to $3.15 billion. Analysts had projected $1.18
a share on $3.26 billion in sales, according to Thomson
Reuters.
Revenue in Viacom's media-networks business declined 3.5% to
$2.57 billion, though there were bright spots. Improving ratings at
some of Viacom's networks, including Nickelodeon, VH1 and BET,
resulted in a 4% year-over-year decline in domestic advertising
revenue, better than analysts expected and an improvement on the
previous quarter's 7% decline.
Domestic subscription fee revenue growth was flat, coming in
under analysts' expectations, due in part to the timing of
content-licensing deals with subscription video-on-demand services
and the effects of AT&T Inc.'s merger with DirecTV on channel
carriage fees.
The biggest shadow hanging over Viacom's stock, some analysts
said, is the pending renewal of its distribution deal with
satellite TV provider Dish Network. In an unusual disclosure, Mr.
Dauman said that Viacom has entered into a short-term extension
with Dish as the companies work on a long-term renewal, warning
"there may be short term hiccups along the way but we firmly
believe that we will ultimately reach an agreement that will be
productive for both sides."
Filmed entertainment revenue sank 15% to $612 million. Viacom
pointed to softer theatrical and home-entertainment revenues, as
well as a tough comparison to the previous year, which was buoyed
by the strong performance from its "Teenage Mutant Ninja Turtles"
film.
Write to Keach Hagey at keach.hagey@wsj.com and Lisa Beilfuss at
lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
February 09, 2016 13:58 ET (18:58 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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