Saturday 16 December 2017

MTV-owner Viacom under pressure as subcribers fall

Ratings for cable TV has suffered as younger people watch more videos online

Actor Channing Tatum and wife Jenna Dewan pose with his award at the MTV Movie Awards. MTV parent Viacom predicts a 3pc fall in subscribers
Actor Channing Tatum and wife Jenna Dewan pose with his award at the MTV Movie Awards. MTV parent Viacom predicts a 3pc fall in subscribers

Lucas Shaw

Viacom has said subscribers to its cable-TV networks will drop by about 3pc this quarter - another hurdle for the owner of MTV and Nickelodeon.

Investors took little solace despite quarterly sales and profit that beat analysts' estimates. The potential exit of a movie-financing partner in China also weighed on the stock.

The subscriber losses add to the tasks facing chief executive officer Bob Bakish as he attempts to turn around the beleaguered media company just emerging from a fight for control and a period of executive turnover.

TV networks MTV, Comedy Central and BET have been losing viewers, and the Paramount Pictures film division has been losing money.

"With both affiliate and advertising negative, and content costs increasing, that can only mean one direction for the earnings contribution from domestic networks (down)," Sanford C Bernstein & Co analysts Todd Juenger and George Zhao said in a note to clients. The stock has tumbled 19pc in the past year.

Viacom is already suffering declines in US advertising sales, and fighting with one of its biggest partners, Charter Communications, over channels being relegated to less popular tiers.

While the rate of subscriber losses in the current period would be better than last quarter's 3.5pc decline, according to Viacom, the figures reflect the difficulties ahead for the company, which makes almost 80pc of its sales from its TV networks. Ratings have suffered as young viewers watch more and more video online.

Viacom posted its highest quarterly revenue in almost two years, boosted by the acquisition of an Argentine TV network and the improved performance of Paramount. A 2pc gain in global advertising sales and higher fees charged to cable and satellite providers also contributed to the growth.

Fiscal third-quarter sales jumped 8.3pc from a year earlier to $3.36bn, compared with the $3.3bn average of analysts' estimates. Paramount posted its first profit since the final quarter of 2015, and boosted sales thanks to Transformers: The Last Knight, the fifth film in the franchise.

Telefe, the Argentine television network Viacom agreed to acquire late last year, helped boost international revenue by 13pc, leaving out currency fluctuations.

Thanks to audiences in China, The Last Knight was a win for the studio even though the movie was the lowest-grossing of any Transformers film, with $570m worldwide. But a financing deal with Huahua Media, a Chinese investor, has been delayed, Viacom said.

Net income was hurt by $59m in charges for Paramount, including severance for former Paramount chief Brad Grey, who died in May shortly after his exit from the company.

Bloomberg

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