Viacom Sinks as MTV Owner Sees More Subscriber Losses Ahead
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- August 3rd, 2017
Viacom Inc. said subscribers to its cable-TV networks will drop by about 3 percent this quarter, another hurdle for the owner of MTV and Nickelodeon.
Shares dropped as much as 7.6 percent to $32.40 in late trading as investors took little solace after quarterly sales and profit beat analysts’ estimates. The potential exit of a movie-financing partner in China also weighed on the stock.
The subscriber losses add to the tasks facing Chief Executive Officer Bob Bakish as he attempts to turn around Viacom, the beleaguered media company just emerging from a fight for control and a period of executive turnover. TV networks MTV, Comedy Central and BET have been losing viewers, and the Paramount Pictures film division has been losing money.
Viacom is already suffering declines in U.S. advertising sales, and fighting with one of its biggest partners, Charter Communications Inc., over channels being relegated to less popular tiers.
While the rate of subscriber losses in the current period would be better than last quarter’s 3.5 percent decline, according to Viacom, the figures reflect the difficulties ahead for the company, which makes almost 80 percent of its sales from its TV networks. Ratings have suffered as young viewers watch more and more video online.
Viacom posted its highest quarterly revenue in almost two years, boosted by the acquisition of an Argentine TV network and the improved performance of Paramount. A 2 percent gain in global advertising sales and higher fees charged to cable and satellite providers also contributed to the growth.
Fiscal third-quarter sales jumped 8.3 percent from a year earlier to $3.36 billion, compared with the $3.3 billion average of analysts’ estimates. Paramount posted its first profit since the final quarter of 2015, and boosted sales thanks to “Transformers: The Last Knight,” the fifth film in the franchise.
Telefe, the Argentine television network Viacom agreed to acquire late last year, helped boost international revenue 13 percent, leaving out currency fluctuations.
Thanks to audiences in China, “The Last Knight” was a win for the studio even though the movie was the lowest-grossing of any “Transformers” film, with $570 million worldwide. But a financing deal with Huahua Media, a Chinese investor, has been delayed, Viacom said.
Third-quarter earnings rose to $1.17 a share, compared with the $1.05 average estimate of analysts. Net income was hurt by $59 million in charges for Paramount, including severance for former Paramount chief Brad Grey, who died in May shortly after his exit from the company. A $285 million boost from the sale of a stake in the Epix TV network to MGM Holdings Inc. added to net income.