Viacom cuts outlook, boardroom fight hurts business

GMT 03:20 2016 Saturday ,18 June

Arab Today, arab today Viacom cuts outlook, boardroom fight hurts business

Viacom said it now expects earnings per share in the current quarter to come in at just $1.00-$1.05
Washington - AFP

Viacom cuts its earnings outlook Friday, blaming in part the high-stakes battle over control of the entertainment giant.

One day after the daughter of Viacom's elderly main shareholder Sumner Redstone moved to oust key members of the board of directors, the company said it now expects earnings per share in the current quarter to come in at just $1.00-$1.05, far shy of the average analyst estimate of $1.38.

Viacom said the company suffered in the quarter from poor box-office sales of its "Teenage Mutant Ninja Turtles: Out of the Shadows" film.

But it also said that an important agreement on streaming video on demand, one of the fastest-growing segments of the entertainment industry, had been delayed due to the fight between a group led by chairman and chief executive Phillipe Dauman and vice chair Shari Redstone over who will control the group when her 93-year-old father dies.

The company said in a statement that it had expected to complete a "significant" SVOD agreement in the current quarter. However, it said, "the recent and highly public governance controversy negatively impacted the timing and its ability to achieve an optimal outcome with partners."

The announcement came hours after Sumner Redstone's National Amusements Inc, which has 80 percent control of Viacom, announced the removal of Dauman and four of his allies on the board of directors.

Their replacements, allies of Shari Redstone, would strengthen her hand on the board.

Viacom shares, which jumped on Thursday on the move to shuffle the board, fell 1.4 percent to $44.44 in late trade Friday.

But the board move remains pending the resolution of a lawsuit filed in a Delaware court by one of the dismissed directors, Frederic Salerno, seeking to block it.

Salerno branded the latest move a "brazen and demonstrably invalid attempt" by Shari Redstone to take over the $40 billion entertainment business, which controls hit names like MTV, Nickelodeon, and Comedy Central, as well as Hollywood giant Paramount Pictures.

Salerno alleged that Sumner Redstone had always intended that independent professionals rather than family members run the company after he dies.

However, he said, Redstone "is being manipulated and used by his daughter in an attempt to accomplish her long-held goal of gaining complete control of Viacom."

On Friday Dauman pressed a Massachusetts court to quickly order a medical examination of Sumner Redstone to show he is not mentally competent to make the decisions attributed to him by his daughter and lawyers.

In an earlier filing, Dauman characterized Redstone as "a 93-year-old man suffering from overwhelming physical ailments, including an inability to speak, stand, walk, eat, write or read."

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