Viacom’s majority shareholder, National Amusements, has renewed its calls for a management shakeup at the firm after Viacom reported a 29% drop in operating income.
Following the announcement of Viacom’s fiscal third quarter results yesterday, National Amusements, which is controlled by the Redstone family, accused the Viacom leadership of overseeing a “significant exodus of creative and business talent”.
It also claimed Viacom, under the leadership of CEO Philippe Dauman, has failed to articulate a “credible long-term plan to reverse the company’s decline”.
“In recent years, the company’s senior management has overseen a steep erosion of revenue growth, earnings, operating performance, financial capacity and shareholder returns – with Viacom ranking at or near the very bottom of industry peers across many of these critical metrics,” said National Amusements in a statement.
The comments come after National Amusements in June axed Dauman, lead board director George Abrams, and three other executives from the Viacom board, appointing five new directors in their place.
The move sparked a legal pushback by Dauman and Abrams who later the same month were given clearance by a Massachusetts to make their case against parent company National Amusements during a trial in October.
Asked on Viacom’s earnings call yesterday to what extent the “public nature of the turmoil” at the top of the company is impacting the day-to-day running of the business, Dauman said: “obviously it’s somewhat of a distraction.”
However, he said it would not stop the management from pursuing its “strategic initiatives” of pursuing international growth, concluding affiliate agreements, producing new programming, building ratings, distribute content in new ways, and partnering with companies like Roku and Snapchat.
“To some extent, and probably the biggest impact has been on the ability to move forward rapidly on the Paramount transaction, which had initially been targeted to result in an agreement about a month ago,” said Dauman.
“That’s certainly been slowed down, but as I indicated in my prepared remarks, they continue. I hope that we will reach a conclusion on that that will be beneficial to the company in due course.”
National Amusements said yesterday that its recent appointment of five new Viacom directors marked the start of a “process of strengthening Viacom” which it said still has “underlying value and potential”.
“However, against the interests of all shareholders, the current board continues to allow Viacom to remain in a state of prolonged and costly paralysis, obstructing changes that are essential to revitalise the company’s assets and create long-term value,” according to National Amusements.
In Q3 Viacom reported a 29% year-on-year decline in operating income, which came in at US$769 million. Net earnings attributable to Viacom were down 27% to US$432 million while revenues were up 2% to US$3.11 billion.