Viacom Projects Full-Year Loss for Paramount After Flopsby
‘Zoolander 2,’ ‘Whisky Tango Foxtrot’ strike out at box office
Cable unit profit declines on ‘modest’ drop in subscribers
Viacom Inc. projected a loss this fiscal year for the Paramount Pictures studio and reported a “modest” decline in cable subscribers, adding to the troubles of ailing billionaire Sumner Redstone’s media empire.
Results for the second quarter, which ended March 31, beat analysts’ estimates, helped by two late 2015 film releases, “Daddy’s Home” and “The Big Short.” But they couldn’t keep Paramount out of the red, with a loss of $136 million after “Zoolander 2” and “Whiskey Tango Foxtrot” flopped at the box office. Meanwhile the cable unit, with networks such as MTV and Comedy Central, reported its smallest profit margin in at least five years.
The results show Viacom’s two businesses -- cable TV networks and motion pictures -- continue to struggle. The larger cable division has suffered from shrinking advertising sales and stalled growth in the fees it collects from pay-TV subscribers. The broader outlook for the company is also clouded by litigation surrounding the mental competency of Redstone, who holds an 80 percent voting stake.
Profit excluding some items fell to 76 cents a share, the New York-based owner of MTV and Comedy Central said Thursday in a statement. Analysts were forecasting 72 cents, the average of estimates compiled by Bloomberg.
- Profit at the media networks fell 11 percent to $805 million, as advertising sales shrank and cable-channel subscriptions declined.
- Total revenue of $3 billion was down 3 percent from a year earlier and compared with analysts’ projections of $2.98 billion.
- Net income of $303 million, or 76 cents a share, compared with a loss of $53 million, or 13 cents, a year earlier.
The shares fell 5.2 percent to $41.50 at 9:41 a.m. The stock had climbed 6.4 percent this year through Wednesday.
Viacom is in the process of selling a stake in Paramount, which will release “Star Trek” and “Teenage Mutant Ninja Turtles” films this summer. On a conference call Thursday with analysts, Chief Executive Officer Philippe Dauman reiterated that the stake will be sold by the end of June. Bidders for the studio are down to a “handful” from more than 40, he said.
The company is also working to turn around its cable networks. Audience ratings at MTV and VH1 improved in the quarter after declining last year. Viacom last week signed a long-term agreement with Dish Network Corp., the third-largest pay-TV provider in the U.S, that will lift subscriber fees. And on Thursday, Viacom said it would work with streaming-video device maker Roku Inc. to deliver tailored advertisements to users.
Viacom’s international TV networks continue to be a bright spot despite currency headwinds, as affiliate fees and advertising sales increased.