Viacom CEO: DreamWorks Takeover Helps Paramount Sale

Philippe Dauman said his company’s process for selling a stake in the studio is still on track for the end of June

Last Updated: April 28, 2016 @ 6:37 PM

Viacom CEO Philippe Dauman said Thursday that Comcast’s $3.8 billion takeover of DreamWorks Animation validates the value of its Paramount movie studio, which is in the process of vetting bidders for a minority stake.

“Here you have DreamWorks Animation, a studio that puts out two movies a year,” compared to the 15 major releases Paramount launches annually, he said on a call to discuss Viacom’s fiscal second quarter. He also noted Paramount has a library of content stretching back more than 100 years, is increasing its potential overseas and has strong family-entertainment franchises stemming from its Nickelodeon brand.

“Today’s announcement is just a validation of the value of the highest form of content, with is motion-picture content,” he said.

He added that the company is still on track to conclude is bidding process for Paramount by the end of June. Viacom has seen “strong interest from around the world” to take a minority stake in Paramount, he said.

Earlier on Thursday, Viacom reported that its financials continued to slip in the company’s latest quarter, but strength from movies like “The Big Short” and a boost from licensing to online video services helped its bottom line from falling as far as Wall Street expected.

Also on the call, Dauman said the money Viacom makes from pay-TV companies and other distributors should improve next year now that it has renewed a meaningful contract with Dish, but the increase will be just a few percentage points.

Viacom expects affiliate fees — the money it gets from distributors like Dish — will grow at mid-single-digit rates in its 2017 fiscal year, which begins in October. That’s slightly better than its guidance for the current year, which it reiterated Thursday is for low-mid-single-digit growth.

Last week, Viacom averted a blackout of its channels for Dish pay-TV customers, after the two companies renewed a deal setting the fees for several years.

Their talks had broken down earlier in the week, with Viacom saying that the satellite provider was making “impossible” demands, while Dish claimed that Viacom was asking for hundreds of millions of dollars in increases despite lower viewership and the wider availability of free content.

But the deal they struck means Viacom has secured rates with all of its major distributors.

“We are very pleased with the terms,” Dauman said on Thursday’s call. “We’ve had a long and strong relationship with Dish.”

Viacom shares were down 1.9 percent to $42.96 at 11 a.m. ET. The stock has sunk about 39 percent in the last year through the close.

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