Viacom Inc. reported lower earnings for its fiscal first quarter as the entertainment company’s newly installed chief executive, Bob Bakish, rolled out an ambitious turnaround plan that marshals resources around six key brands.
Bakish announced that Viacom would focus its energy on its leading brands: MTV, Comedy Central, BET, Nickelodeon, Nick Jr. and Paramount. Viacom plans to rebrand the Spike channel as Paramount next year to boost the profile of the channel and benefit from its association with the legendary Hollywood film studio.
“The strategy is about emphasizing these flagship brands,” Bakish told analysts on a Thursday morning conference call. He dubbed the lineup the “Flagship Six.”
The New York company, controlled by Sumner Redstone and his family, has been racked by turmoil in the last two years amid Redstone’s deteriorating health, court battles with ex-girlfriends and a high-profile boardroom showdown. Viacom also has grappled with a listless stock price, ratings stumbles at key networks and steep losses at the Melrose Avenue movie studio.
“Of course, we still have work to do,” Bakish told analysts. For example, Paramount lost $180 million, on an adjusted basis, in the October-through-December quarter. “The financial performance of that studio was a significant disappointment.”
Viacom beat Wall Street expectations for the quarter by delivering net earnings of $396 million, or $1 a share. But it earned $449 million, or $1.13 a share, in the year-earlier period.
Revenue was up 5% to $3.3 billion.
For the company’s television networks, revenue increased 1% to $2.59 billion in the quarter. The networks’ adjusted operating income was $987 million, down 7% from $1.06 billion in the year-earlier period.
Paramount Pictures revenue increased 24% to $758 million, helped by stronger box-office sales. However, the operating loss of $180 million, on an adjusted basis, represented a decline of 23%. Higher marketing costs for 2017 films was responsible for much of the studio’s red ink.
Nonetheless, Paramount had a better showing creatively. It released two films during the quarter that now are in contention for a best picture Oscar: the science fiction drama “Arrival” with Amy Adams; and “Fences,” based on the August Wilson play and starring Denzel Washington and Viola Davis. Paramount films captured 18 nominations for the Academy Awards, which will be handed out later this month.
In his first three months in the top job, Bakish, 53, has been busy. He became acting chief executive in mid-November and was named the permanent chief executive in December after the company halted its attempt to merge with media company CBS Corp.
The 20-year Viacom veteran formed a “New Day” task force late last year, and he has aggressively worked to craft a turnaround plan, which he presented to Viacom’s board this week. The cornerstone of the plan is to focus Viacom’s resources around the six core television networks. Smaller channels such as VH1, TV Land, CMT and Logo will become “flanker” brands.
Also as part of the corporate shift, the company’s Melrose Avenue movie studio will see a dramatic change in strategy. About half of the slate will be devoted to films that have tangible ties to one of the six flagship TV channels.
There will be projects dedicated to Nickelodeon children’s shows and films that feature key talent from Comedy Central and BET.
“You will see Paramount become a truly integrated part of Viacom,” Bakish said in an interview.
On Thursday, Viacom said that Paramount would begin the collaboration with four projects; the first — a movie called “Amusement Park” — is due in theaters during summer 2018. The following year, an “Amusement Park” series would launch on the Nickelodeon television channel.
Analysts have been closely watching to see whether Viacom can maintain carriage on pay-TV systems for its two dozen networks.
“Twenty-five networks cannot survive,” Todd Juenger, Bernstein Research media analyst wrote in a Thursday report. “You have to drop the weaklings.”
Bakish told analysts he has no plans to shut off the lights at smaller networks, such as CMT or TV Land. But improving ratings at the television channels will be key to helping Viacom negotiate more lucrative deals with pay-TV operators.
“The ratings at MTV are nowhere near where they need to be,” Tuna Amobi, a media analyst with CFRA Research, said in an interview earlier this week. “Investors are going to be closely scrutinizing the signals coming from the new CEO. This is a reset period for Viacom.”
The young women in "Step" demonstrate a routine at the L.A. Times photo studio during the Sundance Film Festival. The documentary is about senior girls in a Baltimore high school step team as they prepare to be the first in their families to attend college.
The young women in “Step” demonstrate a routine at the L.A. Times photo studio during the Sundance Film Festival. The documentary is about senior girls in a Baltimore high school step team as they prepare to be the first in their families to attend college.
The young women in "Step" demonstrate a routine at the L.A. Times photo studio during the Sundance Film Festival. The documentary is about senior girls in a Baltimore high school step team as they prepare to be the first in their families to attend college.
The young women in “Step” demonstrate a routine at the L.A. Times photo studio during the Sundance Film Festival. The documentary is about senior girls in a Baltimore high school step team as they prepare to be the first in their families to attend college.
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SAG Awards statuettes are cast from molten bronze metal at American Fine Arts Foundry in Burbank. (Al Seib / Los Angeles Times)
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Kristen Bell and director Liz W. Garcia discuss the film "Lifeguard" at Sundance.
Kristen Bell and director Liz W. Garcia discuss the film “Lifeguard” at Sundance.
meg.james@latimes.com
@MegJamesLAT
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