It appears Viacom is finally playing ball with its investors.
Due to less than expected earnings, many stakeholders have suggested the company sell some assets or take itself private.
At an investor conference Tuesday, CEO Phillippe Dauman said Viacom plans to sell a small stake in Paramount Pictures and is actively looking for a partner.
Wall Street reacted favorably and the stock soared.
What prompted Dauman’s announcement was the company has been approached by several strategic investors. Analysts attending the investor conference said Dauman believes the move would be good strategically and financially and the new deal should be wrapped up by the third quarter.
Specifically, Wells Fargo analyst Marci Ryvicker says “Proceeds from the transaction will be used to reduce debt (including a near-term maturity), return capital to shareholders, and for strategic initiatives (including ramping up film and TV production at Paramount). PJT Partners will serve as the financial advisor.”
Switching gears, Dauman has a more rosy view of affiliate revenue growth next year. He expects growth of “mid-single digits” or better. Once the Dish renewal is completed, Viacom will have long-term deals in place with all major distributers.
“As far as the decelerated affiliate growth this year, the conversion of T subs to the DTV rate (following DTV’s acquisition of T) is a one-time impact, which will be followed by normal contractual increases,” says Ryvicker in a report. “Going forward, the re-acceleration to mid-single-digit growth or better is expected to be driven by the normal contractual increases, digital distribution deals, and growth from potential new entrants on the distribution side.”
Management also expects a solid upfront, as pricing seems to be good and products such as Vantage and Echo are anticipated to bring in more advertisers.
Viacom has been in a revenue slump for some three years. We recently reported in for the year ending Sept. 20 Viacom’s revenues were down 4% to end at $13.3 billion.
Viacom stock closed up 1.01% or 41/cents to close at $41.01 on NASDAQ on Tuesday.
