Viacom’s stock plummeted on Monday after Sumner Redstone’s National Amusements Inc. — the majority owner of both Viacom and CBS — announced earlier that morning that the two companies would not be merging.
Later in the day — less than an hour before markets closed — Viacom named acting CEO Bob Bakish to the position permanently. That move did not stem the tide, as the company’s stock continued its descent through the end of trading, closing down 9 percent.
Bakish was named acting CEO in October after previously overseeing Viacom’s international operations, which had grown revenue and profitability at a time when the company’s U.S. business struggled. At last week’s UBS Global Media & Communications Conference in New York, Bakish called U.S. MTV’s shift from music to reality and scripted television a “mistake,” drawing a contrast with the channel’s strategy in Europe.
“We’ve grown share three years running,” he said at the conference. “You’ve seen what happened in the U.S.”
In a statement announcing Bakish being named as permanent CEO, Shari Redstone, Sumner’s daughter and vice chair of Viacom’s board, praised his strategic initiatives.
“I am very excited by the strategy Viacom is pursuing under Bob’s leadership, as well as the relentless hard work and passion he has demonstrated not only in his fast start at the helm but in his many years at the company,” she said in the statement. “While there is much work to do, I firmly believe that Viacom has a bright future, and that confidence is underpinned by senior management’s commitment to innovation and a more coordinated, global approach to managing our brands.”
But based on Monday’s sell-off, Wall Street appears less convinced.
Viacom’s stock is down 15 percent year-to-date and 21 percent over the last five years despite billions of dollars in buybacks, as its cable networks like MTV, Nickeleodeon and Comedy Central are under pressure from cord-cutting, and its Paramount Pictures movie studio hasn’t finished higher than sixth in market share since 2011.