Viacom Shares Fall Even As Fiscal Q4 Finances Beat Depressed Expectations

Associated Press

This is shaping up as a dreary morning for Viacom even though it just released fiscal Q4 financials that were not as terrible as it indicated in September when it took a $115 million writedown for the yet to be released Monster Trucks, and cut the dividend in half.

Shares are down about 1% in pre-market trading as investors grapple with the uncertainty in global markets following the U.S. election results — and an announcement from Sony’s PlayStation Vue that on November 11 it will drop all of Viacom’s channels including Comedy Central, Spike, and MTV. This will be “the best way for us to continue to offer the most compelling value to our fans,” it said in a blog post.

This morning Viacom says that it generated $254 million in net income in the September quarter, down 71.3% vs the period last year, on revenues of $3.23 billion, down 14.8%. Wall Street thought the top line would be lower, at $3.08 billion.

Adjusted earnings at 69 cents a share beat forecasts for 65 cents.

The numbers include a 8% drop in domestic ad sales as declining ratings overcame price increases. Worldwide ad sales, including the U.S., were down 7% but would have been up 6% if you factor out weakening currencies against the dollar.

There’s also a $138 million charge for “separation payments” — presumably for former CEO Philippe Dauman who left after losing a power struggle with Sumner Redstone’s National Amusements which controls 80% of the voting shares.

“Viacom ended the 2016 fiscal year well into our transition, as the company’s industry-leading data program increased in size and sophistication, ratings stabilized at several of our key networks and Paramount has begun to rebuild a full, dynamic slate of films,” says interim CEO Tom Dooley — who will leave next week and be replaced by Bob Bakish.

“With new leadership across the company, continued investments in new content, technologies and targeted acquisitions, and an expanded Board of Directors, I have great confidence in Viacom’s next phase, as the company explores the exciting possibilities ahead,” he says.

Media Networks’ operating income dropped 27% to $750 million. In addition to the  drop in ad sales, domestic affiliate revenues fell 19% due in part to “significantly higher revenues from SVOD arrangements in the prior year quarter.”

International affiliate revenues increased 7%, but would have been up 15% if you adjust for the currency shifts.

At Paramount’s Filmed Entertainment unit operations the Monster Trucks charge helped to depress the bottom line to a $137 million operating loss, down from a $122 million profit last year, with revenues down 24% to $774 million.

Last year benefited from Mission: Impossible – Rogue Nation. In the September quarter theatrical revenues were down 55% to $203 million, although  home entertainment revenues increased 23% to $199 million.

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