What's going on?
Viacom’s fourth-quarter earnings beat analyst expectations thanks to its film studio, Paramount Pictures, hitting the red carpet with Mission: Impossible – Fallout. These earnings will not self-destruct.
What does this mean?
Media company Viacom’s film business was all but headed off a cliff until a new CEO took the wheel two years ago and steered the company straight. The latest Mission Impossible movie made headlines by driving Paramount’s sales up by 25% compared to a year ago. Below the fold, Viacom’s revenue from program distributors like Comcast grew by 4% – which is closely watched by investors as an indicator of success because it shows whether people are willing to pay up for everyday television programming, not just come-and-go Hollywood blockbusters.
Why should I care?
For markets: Responding to disruption.
While yet another a Mission Impossible box office hit is a classic example of the old-school movie studio approach, Viacom’s got some new-school in its veins too. Instead of taking on the online streaming platforms like Disney, Viacom’s collaborating with them – streaming its shows Maniac and Jack Ryan on Netflix and Amazon’s Prime Video, respectively. For investors, Viacom’s “if you can’t beat ‘em…” approach may have fewer risks than an all-out battle as more and more consumers cut their cable(s).
The bigger picture: Remaining consciously uncoupled.
Earlier this year, Viacom and fellow broadcaster CBS were set to rekindle their on-screen romance with reports of re-merging some 13 years after first splitting up. A merger would have offered the combined entity huge cost savings (a.k.a. synergies) and perhaps more time to respond to the challenge of streaming platforms. Some believe that CBS’s recent management shakeup makes a deal all the more likely – but Viacom seemingly turning things around on its own (its stock rose 4% on Friday) could mean a coupling may not be as attractive as it once was.