Viacom CEO Philippe Dauman kicked off his quarterly earnings conference call with analysts sounding confident about his battle with controlling shareholder Sumner Redstone — and his efforts to sell a 49% stake in Paramount.
He cites last week’s decisions at the Massachusetts Probate and Family Court and Delaware’s Chancery Court to proceed with cases to protect his power to help govern Redstone’s media empire. Redstone has tried to oust Dauman from three bodies including Viacom’s board.
As for negotiations for Paramount, Dauman says the court decisions “will create a better environment that will allow us to progress with several parties toward a highly beneficial transaction to present to our board.”
Delaware Judge Clears Way For Sumner Redstone Exam In Challenge To Viacom Board
Redstone and his daughter, Vice Chair Shari Redstone, oppose Dauman’s effort.
Dauman and Viacom allege that Redstone, 93, is not competent to run his media empire — and is being manipulated by Shari. The Redstones reject the charges, and say that Sumner is still calling the shots.
Here’s what Dauman said about the overall situation:
Since our last call we have been subject to controversy relating to governance which has obviously created an overhang for our company. Last week, courts in Massachusetts and Delaware rejected motions to dismiss, allowing discovery to proceed and scheduled trials to take place in October.
We view these favorable court rulings as positive steps that move us ahead to a resolution.
In light of the litigation, we won’t be able to comment further on this topic on today’s call.
Dauman did add, though, that the dispute is “somewhat of a distraction.” The biggest impact is on “the ability to move forward rapidly” on the Paramount deal where he had an agreement about a month ago. Still, his efforts “continue.”
He adds that he sees “any difficulties we face as a challenge that we will overcome….In the scope of time it will be viewed as temporary.”
Viacom assured analysts that it still has plenty of cash without income from a sale. “We can easily pay our debt out of our free cash flows and our continued availability in the credit market,” COO Tom Dooley says. “I don’t see any issue there whatsoever.”
Following the disappointing performance of Teenage Mutant Ninja Turtles: Out Of The Shadows, Paramount has had “a rough go,” Dauman says. Viacom anticipates an operating loss at the studio in the current quarter, and for this fiscal year.
But the CEO says he expects the studio’s “fortunes to turn…Paramount will see better days ahead.”
At the media networks, the company says it finished the upfront ad sales market with mid to high single digit percentage increases for the prices it charges for each 1,000 viewers. But it expects a “little worse” performance in ad sales this quarter due to the Olympics.
Distribution revenues will depend on whether the company can complete a deal with an unnamed subscription VOD provider. That could determine whether sales for this fiscal year fall by a low or high single digit percentage.
Dauman said he didn’t want to go into specifics about the “fruitful” discussions he’s having that “very well may be done in this quarter.” He notes that “some of the big so-called traditional distributors are looking at non-traditional, virtual [pay TV] products. We have new distributors such as Hulu…We have to look carefully at the interrelationship of those kinds of discussions with the licensing of shows on SVOD.”
Dauman disputes a widespread belief that Viacom — which has several low-rated networks — could suffer as pay TV and digital distributors assemble so-called skinny bundles of channels that focus on must-have services.
“Our top six networks account for close to 85% of our affiliate revenue and our top eight networks account for close to 95%,” he says.
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