Viacom tumbles on fears for outlook

Advertising

San Francisco (AFP)

Shares in Viacom plunged Tuesday after a disappointing earnings report stoked fears about its outlook in rapidly shifting media-entertainment industry.

Viacom shares slid 21.5 percent to close at $32.86, extending the drop from its 2014 peak of around $90 for the entertainment conglomerate.

Chief executive Philippe Dauman, who last week took over the role of chairman last week to replace 92-year-old Sumner Redstone, sought to portray the outlook as positive as he engaged in a war of words with critics.

"Our outlook and the facts have been distorted and obscured by the naysayers, self-interested critics, and publicity seekers," he told a conference call.

"We will not be distracted or deterred as we build for the bright future ahead of us."

Dauman was named chairman without the support of Redstone's daughter Shari, and activist investors have been calling for a complete management overhaul.

Viacom at the same time unveiled a deal with Snapchat aiming to use the messaging platform to connect more with young audiences.

The agreement gives Viacom the right to sell Snapchat's US advertising inventory, and to provide Snapchat with expanded access for some Viacom content.

But analysts remain concerned that Viacom is falling behind its rivals as content moves to on-demand platforms like Netflix and Hulu.

In the latest quarter, Viacom reported a 10 percent drop in earnings to $449 million while revenues slumped 5.6 percent to $3.15 billion.

Viacom owns the large Paramount studios in Hollywood and cable networks including MTV and Nickelodeon, but its stock has been hit by growth concerns as well as by the soap opera around Redstone, who had remained in firm control despite failing health until last week.

Analysts at Barclays offered a guarded outlook for Viacom after the earnings report and call.

"We came away a bit more concerned post the call that management, despite the company's overall anemic trend lines, seems to be relying on growing out of its problems organically and maintaining its strategic status quo," the analysts said in a note to clients.

As far as the deal with Snapchat, Barclays said that "while the concept seems interesting, the ability to scale it in the time that the company needs to show results is likely to be limited."