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 on Thursday announced that Viacom would focus on its brands that have a global profile: MTV, Comedy Central, BET, Nickelodeon, Nick Jr. and Paramount. Viacom plans to rebrand its Spike channel as the Paramount Network next year to capitalize on its association with the legendary Hollywood film studio.
"The strategy is about emphasizing these flagship brands," Bakish told analysts on a conference call. He dubbed the lineup the "Flagship Six."
"We need more focus," Bakish said. "We have to align the company against where we can have the greatest impact. And we have to be distinct."
The New York company, controlled by Sumner Redstone and his family, is coming off two years of turmoil 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 MTV and other 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 quarter ended Dec. 31. "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 climbed 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 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.
Bakish, 53, became acting chief executive in mid-November and was named the permanent CEO in December after the company halted its attempt to merge with media company CBS Corp.
The 20-year Viacom veteran has aggressively worked to craft the turnaround plan, which he presented to Viacom's board this week.
Paramount will shift its strategy by devoting about half of its slate to films that have tangible ties to one of the flagship channels.
"You will see Paramount become a truly integrated part of Viacom," Bakish said.
For example, Paramount will begin collaboration with Nickelodeon on four projects; the first — a movie called "Amusement Park" — is due in theaters in summer 2018. The following year, an "Amusement Park" series would launch on the Nickelodeon channel.
Bakish told analysts he has no plans to scrap smaller networks, such as CMT or TV Land. But improving ratings at MTV and Comedy Central 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."
Viacom shares jumped 4.3%, or $1.82, to $43.89 — its best performance since July when the boardroom battle intensified. But Viacom's stock is down nearly 40% since early 2015.
2:20 p.m.: This article was updated with additional comments from analysts.