Viacom Says Earnings Will Be Lower Due to Boardroom Battle
Viacom chairman and CEO Philippe Dauman is fighting an all-out war to maintain his position at the media and entertainment conglomerate, and the collateral damage from that battle appears to have spread to Viacom’s financial results. The company said on Friday that its earnings will be lower than expected, in part because of the boardroom upheaval.
According to the statement, Viacom (VIAB) had previously expected to complete what it called a “significant” agreement with an SVOD (subscription video on-demand) provider in the most recent quarter, but said that the “recent and highly public governance controversy negatively impacted the timing and its ability to achieve an optimal outcome with partners.”
The company said it expects to report earnings per share that are as much as 20% below earlier projections. Viacom is now forecasting between $1.00 and $1.05 for the quarter, compared with analysts’ previous expectations of about $1.38 a share.
In addition to the battle for control, which has pitted Dauman against 93-year-old controlling shareholder Sumner Redstone and his daughter Shari, the company said that advertising sales have been weak, and they are expected to be down by 4% for the quarter. Its Paramount movie studio also saw somewhat lackluster results from its recent Teenage Mutant Ninja Turtles film release.
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Poor financial performance, and the resulting impact on the company’s stock price, is one of the most frequent criticisms made of Dauman. Until the recent turmoil started to boost the stock, Viacom had fallen by more than 50%, while other media and entertainment players such as Disney and CBS (also controlled by Sumner Redstone) have prospered.
National Amusements, the Redstone family holding company, recently said it plans to remove Dauman from the Viacom board of directors, along with a number of other directors. Dauman has filed to block this motion, and is also appealing his removal from the Redstone family trust, which will control the billionaire’s 80% voting share in both Viacom and CBS after his death.
Dauman and several members of the board say Sumner Redstone’s daughter Shari is controlling the aging billionaire, who they claim is suffering from dementia and cannot make decisions for himself. Shari Redstone has dismissed these allegations, and statements from the billionaire himself say he has simply lost confidence in Dauman and the board.