Viacom, in the middle of a battle for control between its CEO and its controlling shareholder, reported sharply lower earnings for the June quarter.
The drop was expected as the company announced last month that the latest Teenage Mutant Ninja Turtles movie was a disappointment at the box office, ad sales would be down and revenues from streaming would be down because an agreement with a major distributor had lapsed.
Net earnings fell 27% to $432 million, or $1.09 a share, from $591 million, or $1.47 a share, a year ago
Revenues rose 2% to $3.1 billion.
The results were a bit better than expected by Wall Street, which had been prepared for the worst.
In a statement, CEO Philippe Dauman emphasized the positive.
“In the quarter, Viacom continued to execute on our strategic plan by increasing investment in high-quality original content, enhancing our connection to audiences, accelerating the growth of data-driven advertising products and further expanding our unmatched global reach. Ratings increased at several of Viacom's major networks, including Nickelodeon, Nick at Nite, VH1 and TV Land, and ratings trends at nearly all of our networks showed sequential improvement as we successfully completed a very strong upfront across our brands. Internationally, our media networks are driving strong double-digit revenue growth, with new channel launches, growing distribution partnerships and substantial ad sales gains,” Dauman said, adding that “Viacom's third quarter results were impacted by the underperformance of Teenage Mutant Ninja Turtles: Out of the Shadows."
Dauman is battling for control of the ailing media company with Sumner Redstone, who owns a majority of the voting shares of Viacom. Lawsuits in Massachusetts and Delaware will determine whether Redstone’s attempts to remove Dauman from Viacom’s board and the board of Redstone’s holding company are valid, or if the 93-year-old media mogul is mentally incompetent and acting under the undue influence of his daughter Shari Redstone, also a director of Viacom. Trials are set for October.
Viacom held a board meeting Tuesday, but there’s been no word about what was discussed or decided.
Operating income for Viacom’s Media Networks Group, which includes Nickelodeon and MTV, was down 22% to $872 million because of higher programming and marketing expenses. Revenues were down 3% to $2.5 billion. Domestic ad revenues were down 4%. The company blamed lower ratings at some networks plus an effort to reduce ad loads on its channels.
Filmed entertainment reported a $26 million loss, reflecting the timing of expenses and theatrical performance in the quarter.
On the company's earnings call, Dauman said that ad sales in the September quarter will be weaker because of competition with the Olympics. Favorable trends should return following that, he said.
COO Tom Dooley said that affiliate income will be down low-single digits to mid single digits. They could be down mid single digits to high single digits if some deals don't get done.
And Paramount is expected to have an operating loss for the September quarter and for the full year.