Tags: viacom | earnings | guidance | sumner redstone

Viacom Lowers Earnings Guidance for the First Time Since 2008

Image: Viacom Lowers Earnings Guidance for the First Time Since 2008
(AP)

Friday, 17 Jun 2016 12:28 PM


Embattled media giant Viacom Inc. on Friday said its third-quarter earnings will fall short of Wall Street estimates, marking the first time since October 2008 that it has put out such guidance.

The media company also said that it expects domestic ad sales to decline about 4 percent in the third quarter ending June 30, an improvement from last quarter's decline of 5 percent.

The New York-based media company, which owns Paramount, Comedy Central and Nickelodeon, cited weak performance from its latest Teenage Mutant Ninja Turtle movie and a delay in completing an agreement with an unnamed streaming video provider. It blamed the latter on "the recent and highly public governance controversy."

Viacom Chief Executive Philippe Dauman and controlling shareholder 93-year-old Sumner Redstone are engaged in a fierce fight over control of the company that is playing out in courtrooms in Delaware, Massachusetts and California.

On Thursday, Redstone moved to remove five of Viacom's directors, including CEO Dauman, from the board of the media company, a big step toward a potential management shake-up of the almost $20 billion company.

Redstone said last month he was considering removing Dauman and the board, citing dissatisfaction with the struggling company's strategy that includes a sale of a minority stake in Paramount Pictures. The company has been working to reverse declines in TV ratings at many of its networks.

Wall Street cheered the shakeup. In a note to clients on Friday, analysts at Credit Suisse said any changes the company will make to its strategy would bring "further valuation upside for Viacom shareholders."

Shares of Viacom rose 0.7 percent in midday New York Stock Exchange trading.

Viacom shareholders are footing the bill for some of the spat's legal costs, according to a regulatory filing.

Dauman and board member George Abrams entered into an indemnification agreement on Monday that was approved by a committee of independent directors on the board, the company said in a filing with the U.S. Securities and Exchange Commission on Friday.

"Viacom will pay or promptly reimburse Mr. Dauman's and Mr. Abrams' costs and expenses (including attorney's fees, expert witness fees and fees of public relations and other consultants)," the company said in the filing.

In a May 23 lawsuit filed in Massachusetts, Dauman and Abrams are contesting their removal from Redstone's family trust and the board of National Amusements Inc, the holding company for Redstone's voting shares. The trust will control Redstone's stake after he dies of his declared mentally incompetent.

Viacom said it expects adjusted earnings of about $1.00 to $1.05 per share in the quarter. Analysts, on average, were expecting a profit of $1.38 per share, according to Thomson Reuters I/B/E/S.

The media company said that while the domestic performance of "Teenage Mutant Ninja Turtles: Out of the Shadows" was disappointing, its film unit Paramount has a strong slate of movies coming up and the business should improve.

Viacom will report its third-quarter results on August 4.

© 2017 Thomson/Reuters. All rights reserved.

 
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Embattled media giant Viacom Inc.on Friday said its third-quarter earnings will fall short of Wall Street estimates, marking the first time since October 2008 that it has put out such guidance.
viacom, earnings, guidance, sumner redstone
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2016-28-17
Friday, 17 Jun 2016 12:28 PM
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