Viacom – the powerful listed firm that owns cable channels and film studios – announced dramatically lower profits on Thursday, raising renewed doubts about its management.
The parent company of cable channels MTV, Comedy Central, Nickelodeon and the studios of Paramount Pictures, Viacom reported that its profit had fallen 29 percent last quarter compared to a year ago.
Although profits fell by more than $170 million, much of the decline was expected. Viacom had warned in June that the box office flop of “Teenage Mutant Ninja Turtles: Out of the Shadows” would likely put a significant damper on earnings.
However, the cartoon’s failure is not the biggest headache for Viacom chief executive officer Philippe D. Dauman. Instead, the company has been caught up in a massive, multi-state legal battle over the mental capacity of controlling shareholder Sumner Redstone.
Redstone, who controls Viacom through his stake in National Amusements, has been widely reported to be in declining health in recent years. Although Redstone had long relied on Dauman, he turned on him in recent months and has been attempting to oust Dauman by replacing board members. According to the New York Times, Dauman has fought back by raising questions about Redstone’s mental capacity to act as a controlling shareholder.
The controversy has led to considerable uncertainty over Viacom’s management. It has also apparently made it difficult for Viacom to find a buyer for a minority stake in Paramount, a sale that is part of Dauman’s strategy to boost Viacom’s profits.