Viacom Warns of Profit Shortfall, to Pay CEO's Legal Fees--Update
June 17 2016 - 9:26AM
Dow Jones News
By Austen Hufford
Viacom Inc. on Friday said profits for the current quarter could
fall more than 25% short of expectations because of the
disappointing performance of the latest "Teenage Mutant Ninja
Turtles" movie and a delayed video-on-demand agreement, caused in
part by the company's recent management dispute.
The owner of Paramount Pictures and cable channels like MTV and
Comedy Central said it now expects per-share earnings between $1
and $1.05 for the quarter ending June 30, well below the average
analyst estimate of $1.38, according to Thomson Reuters.
Viacom also expects domestic ad sales to be about 4% lower in
the quarter for a year before.
Viacom's Class B shares, down 33% over the past year, fell 2.1%
to $44.12 in premarket trading.
The disappointing outlook came after Viacom separately said it
would pay the legal expenses of Chief Executive Philippe Dauman and
board member George Abrams in a lawsuit filed against the trust
controlling most of its shares, as the public battle with media
mogul Sumner Redstone continues.
Last month, Mr. Redstone removed Messrs. Dauman and Abrams from
the board of National Amusements Inc., the holding company through
which Mr. Redstone controls Viacom, and the seven-member trust that
will oversee his controlling stakes in Viacom and CBS Corp. when he
dies or is incapacitated.
Messrs. Dauman and Abrams filed suit last month in a
Massachusetts court to challenge their dismissals, arguing that
Viacom Vice Chairman Shari Redstone, daughter of Sumner Redstone,
is engineering the changes by taking advantage of her father, and
that Mr. Redstone doesn't have the mental competency to carry out
the changes.
The agreements announced Friday with Messrs. Dauman and Abrams
have Viacom paying for their lawsuit against National Amusements,
including attorney's fees, witness fees and public relations
costs.
Under the agreements, Messrs. Dauman and Abrams would have to
repay Viacom if either is found to have acted in breach of his
fiduciary duties or in a manner not in the best interest of
Viacom.
A representative from National Amusements was unavailable for
comment.
Viacom said the agreements were approved by a committee of
independent members of the board. On Thursday, National Amusements
Inc. said it was seeking to oust five Viacom independent directors,
including Mr. Dauman and Mr. Abrams. Frederic V. Salerno, Viacom's
lead independent director, immediately filed suit in Delaware to
invalidate the dismissals.
The next phase of the fight will present corporate-governance
questions that legal experts say are rarely considered in the upper
echelons of American business -- with a board and its controlling
shareholder effectively in a legal war.
The suit from Messrs. Dauman and Abrams describes Mr. Redstone
as suffering from a worsening brain disorder and being unable to
write, read, walk or "coherently communicate."
The mogul's doctor put out a statement saying Mr. Redstone was
alert and in no distress during a recent examination, and that he
knows what he's doing. In recent days, Mr. Redstone has met with
top CBS and Paramount Pictures executives, though they came to his
car and details of the meetings weren't available.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
June 17, 2016 09:11 ET (13:11 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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