×
You will be redirected back to your article in seconds

One Year After Exec Shakeup, Viacom Sees Stability But Faces Stock Struggles

It has been one year since Shari Redstone, daughter of Sumner Redstone, prevailed in an epic battle for control of her father’s business empire. As the mogul — now 94 — fell into frail health, Shari Redstone fought it out in court with his former mistresses and confidants. Philippe Dauman bowed to the inevitable on Aug. 20, 2016, and resigned as CEO of Viacom.

The entertainment industry was glad to see him go. Viacom’s stock price had been cut in half over the previous two years, plunging from $88 to $43 by the time Dauman threw in the towel. With Shari Redstone firmly in charge, the company was desperate for a turnaround.

Since then, she has made some decisive moves, promoting Bob Bakish to CEO and bringing in Jim Gianopulos to revitalize her father’s beloved Paramount Pictures. Bakish quickly developed a “flagship” strategy to focus on developing Viacom’s six core brands.

But the stock price has not responded, and in fact has plunged another 30% since Dauman’s departure. As of Aug. 25, Viacom was trading below $30.

The company faces headwinds affecting the entire cable TV business. Investors were especially alarmed when Charter Communications, the nation’s second-largest cable provider, dropped Comedy Central, MTV, BET and other Viacom channels from new subscribers’ basic tier, raising fears about the company’s ability to grow in the skinny-bundle era.

“Owners of cable networks such as Viacom face worse conditions now vs. this time last year,” said Brian Wieser, an analyst at Pivotal Research Group. “It’s going to be a rocky period for [a little] while.”

In an earnings call earlier this month, Bakish pointed to “green shoots” across the business in arguing that the turnaround is beginning to take hold. Bakish underscored the success at MTV, where 3% ratings growth marked the end of a five-year slide, and touted record numbers for Comedy Central’s “The Daily Show” with Trevor Noah. He argued that those gains demonstrate that the strategy of focusing investment on flagship brands is paying off.

“We continue to find that advertisers will recognize the value of TV quantity advertising,” Bakish said, and “appreciate the controlled premium environment that Viacom can offer.”

However, it remains to be seen whether the ratings growth will boost the bottom line. Domestic advertising revenue dropped 2% in the most recent quarter, in part because Viacom decided to reduce the volume of advertising to improve the viewing experience.

Meanwhile, Paramount continues to face hiccups with its $1 billion Chinese slate-financing deal with Shanghai Film Group and Huahua Media. The deal has started and stalled several times since it was first announced under Brad Grey’s leadership in January. Viacom recently revealed that the June payment was delayed, but sought to assure investors that the deal is still on.

“It’s the lack of clarity around Charter and Paramount that has investors panicked,” said analyst Rich Greenfield, of BTIG.

Greenfield argued that those issues have distracted investors from the positive developments over the past year.

“Morale is better and organizationally it’s better,” he says. “There’s actually excitement about the strategic direction in programming philosophy.”

Shari Redstone serves as president of National Amusements, the family company that owns controlling stakes in Viacom and CBS. She’s vice chair of the latter two companies. Last winter, she explored the possibility of recombining Viacom and CBS, but backed off. Longtime CBS Corp. CEO Leslie Moonves made it clear that he saw no need for the two media companies to merge.

Greenfield, however, argued that such a combination is essential to boosting the scale of both firms. “They don’t have any more time to wait. There’s too much fear around what happens with Viacom’s distribution,” he said. “The only way to protect Viacom is to combine it with CBS. CBS doesn’t have the firepower to go up against Amazon and Apple. Both [Viacom and CBS] need to get to scale quickly.”

At the same time, the Redstone legal drama isn’t over. Though it doesn’t dominate the headlines the way it did a year ago, the battle between Redstone and his former companions threatens to provide even bigger distractions in the coming months.

Last fall, Sumner Redstone sued two of his former companions, Manuela Herzer and Sydney Holland, accusing the women of taking advantage of his advanced age to make off with $150 million.

Holland filed a countersuit in December, accusing Redstone of giving out millions to many other women, including $18 million to a flight attendant on the CBS corporate jet and $6 million to the flight attendant’s sister.

Herzer also filed a lawsuit accusing Shari Redstone of depriving her of a $70 million inheritance, while Sumner Redstone is suing Herzer over a penthouse apartment at the Carlyle Hotel they once shared.

Lawyers have skirmished in court for months over discovery issues, and Herzer’s suit has bounced between civil court and probate court in Los Angeles.

Herzer’s lawyers have accused Shari Redstone of orchestrating the litigation on behalf of her ailing father, who can communicate only with great difficulty. Herzer has tried — thus far without success — to force Sumner Redstone to submit to a medical evaluation to show whether he is even aware of the litigation.

In June, Holland’s lawyers won a significant victory by forcing Moonves to turn over any information regarding Redstone’s romantic relationships. Such information — including any about the alleged payments — could lead to further embarrassment if it became public.

Meanwhile, Dauman may be happy to have these troubles behind him. After stepping down from Viacom last year with a golden parachute worth $93 million, he bought a jet — a Textron 680A — and a $20 million mansion in Palm Beach, Fla., just a mile from Donald Trump’s Mar-a-Lago resort.

More Biz

  • Leslie Moonves, CEO of CBS CorporationAllen

    Leslie Moonves to Pursue Arbitration for His $120 Million Severance From CBS

    Former CBS Corp. chairman-CEO Leslie Moonves will pursue an arbitration claim to fight CBS for the $120 million severance that he was denied last month when the company’s board of directors determined he was fired for cause. Moonves was ousted in September after multiple women came forward with allegations of sexual misconduct against the longtime [...]

  • A view of the SK Telecom

    Korean OTT Players, SK Telecom Join Forces to Compete Against Netflix

    South Korea’s three major broadcasters KBS, MBC and SBS have joined forces with the country’s leading telecom firm, SK Telecom, to launch a new video streaming platform. The move is regarded as a defensive reaction against the growing influence of foreign competitors, lead by Netflix. The broadcasters already jointly own Pooq, with MBC and SBS [...]

  • David Lubliner Moves to UTA From

    Veteran WME Agent David Lubliner to Join UTA

    William Morris Endeavor agent David Lubliner is departing the company for a post at United Talent Agency, individuals familiar with the move told Variety. The parting of ways was amicable, the insiders added. Lubliner was a veteran in WME’s motion picture literary department. Rumors of his exit had been floating since Hollywood reopened for the new [...]

  • Bruce Tufeld Dead: Hollywood Agent and

    Hollywood Agent and Manager Bruce Tufeld Dies at 66

    Bruce Tufeld, a Hollywood agent and manager who once repped stars like Rob Lowe, Laura Dern, and Kelsey Grammer, died Tuesday in Los Angeles as a result of complications from liver cancer. He was 66. The son of respected television announcer Richard “Dick” Tufeld and Adrienne Tufeld, Bruce began his career as an assistant at ICM [...]

  • R Kelly protest

    Protesters Rally Outside Sony Music Headquarters, Demand the Company Drop R. Kelly

    Standing in the cold with megaphones outside of Sony Music’s New York headquarters, a group of activists delivered the company, parent of Kelly’s longtime label RCA, a petition signed by over 217,000 people demanding that the singer be dropped from the label. The rally comes less than a week after a plane carrying a banner [...]

  • Robert Smith, Longtime Executive at DuArt

    Robert Smith, Longtime Executive at New York's DuArt Film Labs, Dies at 88

    Robert Smith, a longtime executive with New York’s DuArt Film Labs, died Jan. 11 in Montvale, N.J. He was 88. Smith spent some 62 years with DuArt, the film processing and post-production facility founded in 1922 in the penthouse of an automobile garage in Midtown. Smith rose to president of DuArt before retiring in 2015. [...]

  • Fake Washington Post

    Fake Editions of Washington Post Distributed in D.C.

    The Washington Post was forced to issue a statement on Wednesday morning after commuters were handed fake print copies of the newspaper with a headline claiming President Donald Trump had fled the White House. “There are fake print editions of The Washington Post being distributed around downtown DC, and we are aware of a website [...]

More From Our Brands

Access exclusive content