Negotiations to sell a minority stake in Paramount are “on track” to wrap up by the end of June, Viacom CEO Philippe Dauman told analysts this morning in a quarterly call to discuss early 2016 earnings. He hinted that a potential partner would bring “international and/or technical clout and expertise,” noting that the “motion picture business is evolving.” Proceeds from the sale would be used to reduce debt, pay for “strategic acquisitions,” and return to shareholders via dividends and stock buybacks.
Viacom is in the “final stages” of winnowing down expressions of interest from more than 40 companies to “a handful of strong players,” Dauman says. They’ll hear management presentations until mid-May prior to final negotiations.
“There is strong interest from around the world,” he adds. “We will have a compelling result that will be both a strategic driver, and reflect the significant value of Paramount.”
Paramount just came off a “disappointing” quarter, he says, with anemic sales for Zoolander 2 and Whiskey Tango Foxtrot. Viacom’s just-completed network carriage renewal agreement with Dish Network was made on “favorable terms,” Dauman says. The satellite company’s Sling TV streaming service will pick up a “broader array” of Viacom networks. But that won’t include Nickelodeon. “We will evaluate that as it goes forward.”
Dauman anticipates “strong” upfront ad sales, especially to Hollywood studios that want to promote upcoming movies on Nickelodeon. He told analysts that the reach of Viacom’s networks is “vastly underappreciated.” He acknowledged, though, that with declining ratings “we have limited inventory to take advantage” of the market. He’s optimistic he’ll see “continuing improvement at Comedy Central and MTV” where “we have stepped up our level of programming.”
The bigger-than-expected 5% decline in domestic ad sales at the Media Networks in the March quarter — which the company attributed to soft ratings — was also partly due to Viacom’s decision to reduce ad loads. Absent that, the number would have been down 3%, COO Thomas Dooley says.
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