A woman exits the Viacom Inc. headquarters in New York April 30, 2013. Mario Gabelli, the largest owner of voting shares in Viacom Inc behind Sumner Redstone's family, told Reuters on April 20, 2016, he expects a 10-day blackout of Viacom's programming on Dish Network Corp as a midnight deadline looms on their distribution deal. REUTERS/Lucas Jackson/File Photo
NEW YORK: 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 expected domestic ad sales to decline about 4% in the third quarter ending June 30, an improvement from last quarter’s decline of 5%.
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 removed five of Viacom Inc’s directors, including CEO Dauman, from the board of the media company, a big step toward a potential management shake-up of the almost US$20bil company.
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 1.5% in early 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 US 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 expected adjusted earnings of about US$1.00 to US$1.05 per share in the quarter. Analysts, on average, were expecting a profit of US$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 Aug 4. - Reuters
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