Viacom vamoose!
TV channels yanked from basic cable
Viacom Chief Executive Bob Bakish turned in a better-than-expected quarter, but investors fled the stock after the owner of MTV and Nickelodeon confirmed that cable giant Charter Communications is taking Viacom’s channels out of basic-cable packages for new customers.
Investors are spooked about the weak ad climate and the disappearance of almost half a million subscribers from cable, satellite and telco video packages as new online services come on stream.
Viacom B shares closed off 7.1 percent to $36.46.
“A tepid market for domestic national TV advertising, weakening cable subscriber trends and the need to invest more heavily against content,” wrote Brian Wieser, an analyst with Pivotal Research, outlining Viacom’s chal- lenges in a Thursday note.
The company, controlled by the Redstone family, is at risk of seeing lower subscription fees from its existing business if it is moved out of the most widely distributed packages and on to separate tiers.
Bakish told investors that he is protesting the tiering change with Liberty Media-backed Charter, which said it would only offer Viacom channels on a higherpriced tier to new custom- ers. That could threaten the underpinning of Viacom’s affiliate fees.
Charter and New York cable company Altice USA have distribution agreements with Viacom that are set to expire in the next year or two.
Viacom’s profit fell to $121 million, or 30 cents per share, in the first quarter. Revenue rose 8.5 percent, to $3.26 billion, versus analysts’ expectations for $3.02 billion.
Revenue from Viacom’s film business jumped 37 percent, to $895 million, in the second quarter ended March 31. Analysts had penciled in $676.5 million, according to FactSet.
Viacom said action thriller “xXx: Return of Xander Cage,” starring Vin Diesel, grossed more than $346 million at the worldwide box office. The company named a new Paramount Pictures boss in March, Jim Gianopulos.