Viacom sees weak affiliate sales, shares plummet

REUTERS – Viacom Inc, the operator of MTV, Comedy Central and Paramount Pics, forecast a small solitary-digit dip in profits to U.S. pay out-Tv businesses and streaming movie services this quarter, sending its stock down just about 8 p.c after hrs.

The media corporation conquer Wall Street’s typical estimates for fiscal 3rd-quarter profits and profit, served by an unexpectedly robust 4 p.c bounce in these types of affiliate profits, but traders centered on the downbeat projection for the existing quarter.

“As great as the affiliate payment amount was in this quarter, it looks really terrible in the upcoming quarter,” explained Brian Wieser, an analyst at Pivotal Investigate Team. “You won’t be in a position to see traders having extremely intense anticipations after this phone.”

Shares of Viacom, managed by mogul Sumner Redstone and his daughter Shari, fell 7.7 p.c to $32.37 in after-hrs trading.

For the latest quarter, Viacom explained U.S. profits to pay out-Tv affiliate marketers and on the internet movie companies these types of as Netflix Inc, which pay out to display screen its displays, rose 4 p.c to $1.01 billion, largely due to the timing of some deals with streaming movie services.

On a submit-earnings conference phone executives explained that bump would not be repeated this quarter, and as a substitute explained they expected affiliate profits to dip.

The meager outlook will come as U.S. television networks and cable vendors are struggling to hold hold of viewers as far more view displays and motion pictures on smartphones and tablets. Six of the most significant U.S. pay out Tv vendors posted subscriber losses for the duration of the previous quarter.

As a consequence, traders are concerned that businesses like Viacom will not be in a position to negotiate amount boosts from their pay out-Tv associates.

Affiliate Sales Worry

Problems about these types of a knock-on effect on Viacom of the drop in traditional cable Tv subscriptions deepened final quarter, when Charter Communications Inc moved five of its flagship networks to its most costly programming tier, a shift that will likely consequence in decrease affiliate profits for Viacom.

Viacom Main Government Bob Bakish explained on the conference phone he does not assume to take care of the concern with Charter until finally the two reach a new offer. “This could choose a tiny time,” he additional.

Bakish took in excess of the helm at Viacom final calendar year and is making an attempt to turn close to the company’s fortunes by concentrating on six of its makes – Paramount, Guess, Comedy Central, MTV, Nickelodeon and Nick Jr.

As part of its ideas, Viacom final thirty day period tried to get Scripps Networks Interactive, dwelling of way of life networks these types of as Foods Network, HGTV and the Vacation Channel, but was outbid by Discovery Communications Inc, which introduced on Monday it is shopping for Scripps for $11.9 billion.

Bakish explained on Thursday Viacom is open to mergers and acquisitions, but the “too much to handle emphasis is on organic and natural execution.”

Ads Dip Once more

Viacom’s domestic promoting profits fell 2 p.c in the latest quarter, in line with analysts’ anticipations, according to FactSet.

The corporation explained it expects a different small solitary-digit drop in the existing quarter, which it largely characteristics to the company’s tactic of cutting advert hundreds, or how extensive commercials operate for the duration of its displays.

Excluding some products, the corporation acquired $1.17 for each share. Analysts on typical experienced expected to get paid $1.05 share, according to Thomson Reuters I/B/E/S.

Web profit attributable to Viacom rose to $683 million, or $1.70 for each share, in the quarter ended June 30, from $432 million, or $1.09 for each share, a calendar year before.

Income rose 8.3 p.c to $3.36 billion, beating analysts’ expectation of $3.29 billion.

Aside from falling affiliate and advert profits, Viacom traders also fretted on Thursday about a snag in the company’s Chinese movie financing offer, which executives disclosed on the phone, noting that Chinese studio Huahua Media delayed a payment to the corporation in June.

In January, Viacom introduced a $1 billion hard cash investment decision from Shanghai Movie Team and Huahua Media, giving the U.S. studio substantially-needed hard cash and guidance as it tries to develop.

Even with the delay, Viacom Main Economical Officer Wade Davis explained “anything is on observe” with the movie-financing offer.

Reporting by Aishwarya Venugopal in Bengaluru and Jessica Toonkel in New York Enhancing by Maju Samuel and Monthly bill Rigby

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