Viacom’s share price plummets as Dauman attacks ‘naysayers’

Philippe Dauman

Viacom’s shareprice fell to its lowest point since 2010 yesterday after disappointing results and an earnings call in which Philippe Dauman slammed “naysayers” for questioning the company’s direction.

Speaking on the call, Viacom CEO Dauman, who earlier this month was also named executive chairman of the US media giant, described 2015 as a “challenging year” for Viacom, but said it was also a “watershed year in which we took many important steps to position Viacom for the future”.

In his opening speech, a defensive Dauman said: “I want to address the speculation about Viacom and our future. Our outlook and the facts have been distorted and obscured by the naysayers, self-interested critics and publicity. We will not be distracted or deterred as we build for the bright future ahead of us.”

The comments failed convince investors, as the company’s shareprice fell 21.5% to close at US$32.86 after Viacom reported a year-on-year decline in both earnings and revenues.

Viacom said that domestic advertising revenues declined 4%, as price increases were more than offset by a decline in traditional ratings at some of its networks, while affiliate revenues decreased 6%.

Worldwide ad revenues dropped 3%, reflecting “an unfavourable 1% impact of foreign exchange”, though international affiliate revenues increased 3%.

Overall the for its fiscal first quarter, 2016 – the three months ended December 31, 2015 – Viacom reported quarterly revenues of US$3.15 billion, a 6% year-on-year decline. Net earnings attributable to Viacom came to US%449 million, down 10% compared to the same quarter a year earlier.

In a bid to spur future growth, Dauman said that Viacom had “reorganised and refocused”, increasing both its media networks and filmed entertainment production pipelines, and had stepped up its investment in data measurement.

He also said its newly penned Snapchat deal was an indication of how Viacom planned to move into the future and grow its brands on multiple platforms.

Asked if there will be any change to Viacom’s strategy now that he has taken a combined CEO and chairman role, Dauman said that Viacom had taken “a significant number of steps” to move into the future, build its existing ecosystem and grow internationally.

“You will see more deals to come,” he said. “I will leave no stone unturned, I never have and I never will. Our objective is to build value. We are building value for the long term.”

Viacom’s wide-ranging Snapchat agreement, which was announced yesterday, covers content production and advertising sales, with Viacom networks, Comedy Central International and MTV’s US feed, to be added to the Snapchat Discovery platform.

Dauman’s promotion earlier this month saw him replace 92-year-old Sumner Redstone as Viacom chairman, despite public opposition from Redstone’s daughter and Viacom board member, Shari Redstone. She was the only board member to vote against Dauman’s appointment.

Activist shareholder SpringOwl Asset Management said last week: “We are disappointed with the company’s decision to appoint Philippe Dauman as executive chairman. It raises questions about the board, corporate governance and fiduciary duties. As evidenced by the negative reversal in the stock price, the market agrees with the position of both SpringOwl and Shari Redstone that someone other than Philippe Dauman should be the chairman.”