Viacom lowers earnings guidance for first time since 2008
NEW YORK—Embattled media giant Viacom Inc (VIAB.O) 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 Inc’s VIAB.O directors, including CEO Dauman, from the board of the media company, a big step toward a potential management shakeup 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.—Agencies