Viacom Inc. reported a 27% slide in profits, hurt by the continued weak performance at it networks, higher costs and a poor box-office showing.

The results come amid a high-stakes fight for control of the company. In June, Sumner Redstone, the 93-year-old who controls Viacom through his holding company National Amusements Inc., decided to replace five board members at the media company, including Chief Executive Philippe Dauman, his confidant of nearly three decades.

Mr. Dauman and others have responded with a lawsuit questioning Mr. Redstone's mental capacity and whether he is being unduly influenced by his daughter Shari Redstone, vice chair of Viacom. She has denied the assertion.

For the June quarter, Viacom reported a profit of $432 million, or $1.09 a share, down from $591 million, or $1.47 a share, a year earlier. Excluding a tax benefit, per-share earnings fell to $1.05 from $1.47.

Revenue edged up 1.6% to $3.12 billion.

Analysts polled by Thomson Reuters had projected $1.01 in adjusted earnings per share on $3.01 billion in revenue.

Viacom had warned in June that results would fall well short of expectations, a gloomy outlook that the company blamed on weak movie sales and a delay in a video-on-demand licensing deal, caused in part by the company's turmoil.

At that time, the company said it expected per-share earnings between $1 and $1.05 for the quarter, compared with an average analyst estimate of $1.38, according to Thomson Reuters.

Shares in the company, down 23% over the past year, rose 4.9% to $51 in premarket trading.

Wednesday, Viacom said revenue from the company's media networks business—its largest—declined 3.2% as domestic ratings fell and advertising dollars declined. Amid declining sales and climbing expenses, profit in the segment tumbled 22%.

Viacom, owner of networks including VH1 and Nickelodeon, has grappled with viewers' increasing tendency to cut the cable cord, like other media companies. Fellow cable operator Time Warner Inc. on Wednesday announced a 10% stake in the streaming service Hulu in an effort to remain competitive in the changing market.

For its part, Viacom has been working to beef up its data-driven advertising products, such as Viacom Vantage, while investing in original content to help boost profitability.

Viacom's filmed entertainment revenue, meanwhile, jumped 30% from a year earlier, thanks largely to higher licensing fees. But the underperformance of "Teenage Mutant Ninja Turtles: Out of the Shadows" and rising costs pulled film earnings to a loss of $26 million, down from a year-earlier profit of $48 million.

Viacom's Paramount Pictures business has been a flashpoint in the conflict between company management and Mr. Redstone. Mr. Dauman would like to sell parts of the business, but National Amusements Inc.—the holding company through which Mr. Redstone controls Viacom—has publicly opposed the move, calling it a mistake and saying it could have a "severe negative impact" on the company's future.

The Wall Street Journal, citing people familiar with the matter, has reported that Viacom is in talks with China's Dalian Wanda Group Co. to sell a 49% stake in Paramount and is seeking a deal that would value the studio at $8 billion to $10 billion.

Wednesday, Mr. Dauman noted that Viacom's international performance during the quarter was stronger than its domestic showing. He said the company continued to work on its strategic plan of increasing spending on producing original content and ramping up its data-driven advertising products. Total expenses rose 18%, pushing the company's operating margin down to 24.8% from 35.4%.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

 

(END) Dow Jones Newswires

August 04, 2016 08:35 ET (12:35 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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