Sumner Redstone’s company, National Amusements, which controls Viacom said the media company’s third quarter results showed why it is pushing to make changes.
Embroiled in a struggle for control between Redstone and CEO Philippe Dauman, Viacom reported earnings that were sharply lower, as expected.
“Viacom’s overall performance continues to highlight the need for changes to leadership at the company, as National Amusements and many other investors have called for,” National Amusements said in a statement. “In recent years, the company’s senior management has overseen a steep erosion of revenue growth, earnings, operating performance, financial capacity and shareholder returns—with Viacom ranking at or near the very bottom of industry peers across many of these critical metrics. At the same time, there has been a significant exodus of creative and business talent. Viacom’s third quarter performance does little if anything to change these adverse trends.”
On Viacom’s earning call Dauman said that while the fight with Redstone was “somewhat of a distraction,” management has not been deterred from implementing its strategy. It has delayed plans to sell a 49% stake in Paramount pictures. Redstone opposes that sale.
And in a statement, a spokesman for Viacom said: "Viacom continues to execute on its strategic plan, which is supported by a majority of its independent board. As discussed by management on this morning’s earnings call, we are looking to the future and executing on the significant growth opportunities we see around the world. In contrast, It is unfortunate that one of our directors feels the need to try to damage the company in response to losses in the courtroom.”
The National Amusements statement criticizes the company’s performance compared to other media companies and notes the loss of talent at the company. It also says that instead of investing in “valuable business opportunities,” the company has been buying back it own stock at prices that have turned out to be much higher than the stock is currently worth.
“Notwithstanding management’s failures and Viacom’s declining performance, CEO Philippe Dauman’s contract was extended through 2018, he was promoted to Chairman, and (as Viacom disclosed in January 2016) he was awarded $54.2 million in compensation for 2015, a 22% increase over 2014,” the statement said. “ Mr. Dauman is the third highest paid CEO in the United States and among the worst as measured by pay for performance. Including his pre‐negotiated 'golden parachute,' he stands to receive almost a half billion dollars for a tenure that has seen the marked decline of one of the nation’s greatest media companies.”
National Amusement says it is confident in the value and potential of Viacom’s assets. It said it wants new directors on the board, though its attempt to replace five Viacom directors including Dauman is held up in court.
“Against the interests of all shareholders, the current board continues to allow Viacom to remain in a state of prolonged and costly paralysis, obstructing changes that are essential to revitalize the company’s assets and create long‐term value,” the statement said. “National Amusements believes that it is time for Viacom’s current directors to stop supporting failed management and start representing shareholders, by allowing the new board to take the reins, and return the company to its position as an industry leader.”