Business

Viacom CEO blasts critics as stock plunges

By
Social Links for Claire Atkinson
Published Feb. 9, 2016, 10:35 a.m. ET

Viacom Chief Executive Philippe Dauman on Tuesday issued another round of dismal quarterly results, but took a new tack in explaining away a decline in profits, revenue and ratings: The critics are responsible.

In his first public comments since adding the title of chairman last week, Dauman defended his leadership of the media giant over the last nine years and said the parent of Comedy Central, MTV, Nickelodeon and other cable TV assets was on solid footing.

“Our outlook and the facts have been distorted and obscured by the naysayers, self-interested critics and publicity seekers,” Dauman said during a sometimes tense conference call. “We will not be distracted or deterred as we build for the bright future ahead of us.”

Wall Street begged to differ.

Viacom shares were pelted in very heavy trading, falling 21.5 percent, to $32.86, a 52-week low. It was the stock’s worst one-day performance since 2010.

Dauman’s gripes appeared to be aimed at:

  • Manuela Herzer, the former girlfriend of Viacom founder and Chairman Emeritus Sumner Redstone, who has filed a lawsuit challenging the move to replace her as Redstone’s health-care proxy with Dauman.
  •  Large class A shareholder Mario Gabelli, who has become increasingly vocal on the need for some transformative deal-making at Viacom — such as selling Paramount, perhaps to Alibaba.
  • And increasingly critical media, which Dauman said have been disrespectful of Redstone’s legacy.

Dauman talked up Viacom’s stock performance, saying it beat the benchmark S&P 500 from 2009 until 2013. However, over the past two years, the S&P is up 3.1 percent while Viacom shares are off 60 percent.

In the three months ended Dec. 31, overall profits fell 17 percent on a 5.7 percent decline in revenue as the company’s film and cable networks struggled.

Dauman, the CEO since September 2006, also lowered estimates for subscription fee revenue growth in 2016 to “the low mid-single-digit” range from the “high single-digit” range.

In a testy exchange, BTIG analyst Rich Greenfield asked Dauman what he was referring to when said there was much noise around the stock.

“Well, if you haven’t been listening, you don’t know what the noise is. I think it is obvious to everybody what the noise is,” Dauman said.

Ironically, the day after his predecessor Tom Freston exited for alleged failures to make digital inroads, the company’s stock closed the Sept. 5, 2006, session at $35.24 — 7 percent higher than Tuesday’s close.

In reporting fiscal first-quarter results, Dauman confirmed the company inked a new digital revenue deal with messaging platform Snapchat.

Under the deal, Viacom will sell ads against new Snapchat content in addition to programming on its own channels, MTV and Comedy Central.

On Wednesday, Eric Jackson of SpringOwl Asset Management, a vocal critic of Dauman’s leadership, said Viacom’s current “independent” board members are anything but and need to step down.

“We call on Shari Redstone to chair a new board committee to appoint the new independent directors to help ensure that Viacom properly turns itself around for the sake of all shareholders and for the sake of employees,” he said in a statement.