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Viacom cuts earnings guidance

International Business
Sat, 18 Jun 2016

New York: Embattled media giant Viacom Incorporated yesterday said its third-quarter earnings will fall short of Wall Street estimates, marking the first time since October 2008 that it has put out
such guidance.

The company also said that it expects domestic advert sales to decline about four per cent in the third quarter ending June 30, an improvement from last quarter’s decline of five pc.

The New York-based media company cited weak performance from its latest Teenage Mutant Ninja Turtle movie and a delay in completing an agreement with an unnamed streaming video provider. It blamed the latter on “the recent and highly public governance
controversy.”

Viacom chief executive Philippe Dauman and controlling shareholder Sumner Redstone are engaged in a fierce fight over control of the company that is playing out in courtrooms in Delaware, Massachusetts and California.

Redstone moved to remove five of Viacom’s VIAB.O directors, including Dauman, from the board of the media company, a big step towards a potential management shake-up of the almost $20 billion company.

Redstone said last month he was considering removing Dauman and the board, citing dissatisfaction with the struggling company’s strategy that includes a
sale of a minority stake in Paramount Pictures. 

The company has been working to reverse declines in TV ratings at
many of its networks.

Wall Street cheered the shake-up. In a note to clients, analysts at Credit Suisse said any changes the company will make to its strategy would bring “further
valuation upside for Viacom shareholders.”

Viacom shareholders are footing the bill for some of the spat’s legal costs, according to a regulatory filing.

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