Viacom CEO Philippe Dauman’s frustration with the many critics of his performance — and appointment last week as Executive Chairman, following ailing controlling shareholder Sumner Redstone’s transition to Chairman Emeritus — bubbled over this morning in his quarterly earnings call with analysts.
Wanting to “address the speculation about Viacom and our future,” Dauman said that “our outlook and the facts have been distorted and obscured by the naysayers, self-interested critics, and publicity seekers” following a 12 month period when company shares have lost 37.6% of their value. He continued:
We will not be distracted or deterred as we build for the bright future ahead. As Executive Chairman and CEO I will continue to work tirelessly to secure that future and will leave no stone unturned, either tactically or strategically. Sumner and I have a more than 30 year history, side by side, building his media empire. He and the board of Viacom, believing in my ability and my character, have entrusted me with weighty responsibilities, none of which are inconsistent or incompatible. My singular objective is to protect and build value for all of Viacom’s shareholders and in doing so, all the beneficiaries of Sumner’s trust not only including descendants of his daughter [Viacom Non-Executive Vice Chair Shari Redstone] but also those of her brother [Brent Redstone]. And finally, let me be absolutely clear. I could not be more focused on getting Viacom’s stock price back to the much higher level it enjoyed under my leadership just a short time ago. No one should doubt my resolve or the resolve of our entire management team in making that happen.
The comment was part of a largely defensive presentation following Viacom’s weaker than expected earnings report for the last three months of 2015. Shares opened this morning down more than 10%.
He acknowledged that “clearly we have fallen back a lot in the last two (years) and especially the last year” adding that “some of the decline (was) accentuated by a lot of noise.” He declined to clarify his remark, in response to a question: “It’s obvious to everybody what the noise is.”
But he also warned that Viacom may encounter more static.
The CEO hinted that Viacom will sue Comcast after it moved channels including Spike, and CMT to higher-priced packages.
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“They have violated our agreements and we are not going to sit back,” he says. “We will preserve our rights as we go forward.”
In addition, Dauman said that there may be “hiccups along the way” in its widely watched negotiation to renew a carriage deal with Dish Network. The companies agreed to a “short term extension” of their current deal while they continue to talk. He believes it will result in “an agreement that will be productive for both sides.”
Investors fear that Viacom would be badly hurt if it loses Dish’s 13.9 million subscribers. Some small cable operators including Suddenlink have dropped the company’s channels saying that they cost too much at a time when ratings are falling and many of their shows are widely available online.
In other comments, Dauman describes Viacom’s international businesses and Paramount Pictures as “underappreciated” by the Street.
Although some company watchers believe Viacom ought to sell the movie studio, Dauman describes it as “a very valuable and significantly undervalued part of Viacom.”
Paramount has been “from an historical standpoint in a brief income slump due in part to the recent low number of theatrical releases which reduces the positive waterfall impact of prior year film releases. This will change now that we are back on track” to release about 15 films per year. He also talked up Paramount’s young TV production operation and “rebuilding process.”
When that’s complete, “we expect Paramount to pump out significant operating income and free cash flow in the years to come.”
Dauman also says he’s optimistic about Viacom’s cable networks — especially once there’s a turnaround at slumping Comedy Central and MTV.
The Daily Show host Trevor Noah “has proven to be a star and will continue to build on his strong start” especially among young viewers — and as its political jokes resonate in an election year.
Still, he noted that there are “soft spots in the schedule and consumption shifts to undermeasured platforms [that] resulted in challenging ratings overall.” He believes, though, that “Comedy Central will overcome these issues.”
MTV also “experienced a difficult [quarter] overall” with ratings that were “lower than expected.” The network’s program development process “didn’t adapt quickly enough to the shifting preferences of its audiences.” He hopes to fix that by accelerating development of new shows “and returning its best series in faster cycles.”
He believes the numbers will improve this quarter with the returns of Teen Mom and Teen Wolf and that MTV “is headed in the right direction.”
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