LOS ANGELES, Calif. – Viacom Inc. CEO Philippe Dauman defended himself in a testy exchange with analysts during a quarterly earnings conference call Tuesday after the media company behind MTV and Paramount Pictures missed revenue expectations for the fifth quarter in a row.
The call occurred as 92-year-old chairman emeritus Sumner Redstone — who has a speech impediment and requires a feeding tube — was said to be listening in. It came just a few days after Dauman replaced Redstone as executive chair to go along with his job as CEO, and three weeks after Viacom awarded Dauman a $17 million contract renewal bonus that boosted his overall pay 22 per cent to $54.2 million last year.
In reaction to the weak quarter and a call that didn’t inspire investor confidence, Viacom’s shares fell more than 21 per cent Tuesday to $32.86, their lowest close in more than five years.
“Given the exceedingly poor performance of Viacom over the last few years … just wondering if you could give us colour on why you were the board’s choice to be both chairman and CEO?” asked Rich Greenfield, an analyst with BTIG.
Dauman said while the stock beat the S&P 500 average for five years running, over the last two years the share price decline has been “accentuated in the recent past by a lot of noise.”
Pressed on what he meant, Dauman replied, “I think it’s obvious to everybody what the noise is.”
The noise is the uncertain prospect of who’ll control Viacom going forward, as Redstone’s health and mental capacity is the subject of a court case in Los Angeles brought by his former caregiver and ex-girlfriend. After Redstone dies, the near 80 per cent voting control of both CBS Corp. and Viacom will pass to a trust with seven members including Dauman and Redstone’s daughter, Shari Redstone. She alone opposed Dauman’s ascension last week in a 10-1 vote in part because of his close involvement in family affairs.
Corporate governance experts say Dauman’s position as CEO and board chair leaves him unaccountable, especially since the majority control of the company is in the hands of a man whose mental competence is in question.
Those issues were exacerbated by poor performance at Viacom itself, where revenue fell 6 per cent to $3.15 billion in the quarter that ended Dec. 31, missing the $3.26 billion Wall Street forecast. The results were hurt by a ratings decline at networks MTV and Comedy Central. Movie studio revenue fell 15 per cent and movie losses more than doubled.
Viacom earnings, adjusted for pretax expenses, fell 9 per cent to $1.18 per share, meeting the estimates of analysts surveyed by FactSet.
In an attempt to indicate it was going after the next generation of viewers, Viacom announced a deal Tuesday in which it would bolster its MTV and Comedy Central presence on Snapchat’s Discover platform.
Investors looked past the deal and toward a troubling reduction in outlook for the growth of pay TV subscriber revenues.
The shrinking pay TV universe — down about 1 per cent to 99.7 million homes in December, according to Nielsen — is a problem for all major media companies as more young people cut the cord or don’t sign up to begin with.
Viacom trimmed its outlook for subscriber fee growth to the “low-to-mid-single digit” percentages for the year, down from the “high-single digits” it expected in November.
Barclays analyst Kannan Venkateshwar said hope for the company comes mainly in the form of a sale or other big strategic move, writing Tuesday he felt “a bit more concerned” after the conference call that Viacom’s strategy “seems to be relying on growing out of its problems organically.” The title of his research note: “Status quo is not a plan.”