Viacom CEO: Paramount In An 'Improving Situation'
May 27 2009 - 3:48PM
Dow Jones News
Philippe Dauman, chief executive with Viacom Inc. (VIA), said
Wednesday that the company's film studio, Paramount Pictures, is an
"improving situation."
Dauman, at an investor conference hosted by Sanford C.
Bernstein, listed Paramount's ongoing "turnaround" as a factor that
will deliver long-awaited gains for shareholders as efforts to
improve its performance bear fruit.
Sagging profit margins at its film division has been a headache
for the media conglomerate's investors as its stock price has
declined sharply since it was separated from CBS Corp. (CBS) in
early 2006.
In the first quarter, operating losses at Viacom's film division
almost doubled, and Citigroup analyst Jason Bazinet said the
company may wind up selling Paramount, which he values at $3.8
billion - down from the $10 billion the company paid for the studio
in 1994.
Dauman said Paramount remains an important piece of Viacom's
portfolio because the studio can be used to promote its cable
network brands, like Nickelodeon and MTV.
"We have a very good marketing machine within our organization,"
said Dauman.
He noted that the company recently slashed costs at Paramount
and restructured the business with measures like folding its
Paramount Vantage label into the larger studio that will result in
annual savings of $50 million.
He also said Paramount's strategy of releasing fewer films and
focusing its investment on proven film franchises will improve its
performance. The company has enjoyed recent success with the
release of its new Star Trek movie, and it has new installments
coming up for hit franchises like Transformers, Iron Man and GI
Joe.
-By Nat Worden, Dow Jones Newswires; 201-938-5216;
nat.worden@dowjones.com