Viacom Shares Surge as MTV Owner Expects Return to Ad Growth

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MTV is bringing back the cast of its old hit 'Jersey Shore' for the new 'Jersey Shore Family Vacation.'
MTV is bringing back the cast of its old hit 'Jersey Shore' for the new 'Jersey Shore Family Vacation.' Credit: Viacom Media Networks

Viacom shares surged as the company, the owner of Comedy Central and MTV, predicted U.S. advertising sales would return to growth later this year.

"We believe we have reached a turning point in our domestic advertising story," CEO Bob Bakish said on an earnings call.

Viacom's domestic advertising revenue will improve in large part because its TV networks have regained wide distribution with Charter Communications, the second-biggest U.S. cable operator, and Suddenlink Communications, a smaller provider, Bakish said. That will also lead to improved U.S. subscriber revenue.

Bakish's projections convinced investors that he's making headway in efforts to turn around the beleaguered media company. Shares of Viacom jumped 7.2 percent to $32.71 at the close in New York, the biggest gain in almost a month.

The stock rose despite Viacom's report of lower revenue for the first three months of fiscal 2018, a reminder of why the controlling Redstone family wants to merge the company with their other big media investment, CBS Corp.

Revenue fell 7.6 percent to $3.07 billion in the period, New York-based Viacom said Thursday in a statement. That was less than the $3.15 billion average of analysts' estimates and resulted from slumping ad sales, slower growth in subscriber fees and struggles at the Paramount Pictures film studio.

Earnings of $1.03 a share, while little changed from a year ago, beat Wall Street forecasts of 93 cents.

Looking back

The numbers at Viacom still look a lot like they did in 2016, with revenue shrinking and ratings at many networks in decline. The company's struggles then sparked an open feud between Viacom's former management, led by Philippe Dauman, and the controlling shareholders, Sumner Redstone and his daughter Shari, who now oversees the family empire.

The Redstones ousted Dauman in 2016, unsuccessfully pushed for a merger with CBS and then installed Bakish as Viacom's full-time CEO. Consolidation among pay-TV companies and rival media properties has brought the Redstones' merger ambitions back to the fore, and the boards of the two companies said last week they will form committees to explore a deal.

Bakish has made sweeping changes, appointing new leadership at Paramount, rebranding the Spike cable network and striking new distribution deals with pay-TV providers. On Thursday, the company said it plans to introduce a new direct-to-consumer service by the end of September.

The payoff from those changes will take time. While viewership of MTV has improved, first-quarter advertising sales at Viacom's domestic cable networks slumped 5 percent. And while Nickelodeon ranks among the most-watched networks during the day, prime-time ratings are declining again at Viacom networks, most of which rank among the least-watched major outlets on cable in the U.S.

-- Bloomberg News

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