Everything Investors Need to Know About Viacom (VIAB)
When I'm watching TV and flipping through channels on a lazy Sunday afternoon, I'm sometimes shocked by the amount of choices I have. Wow, I think to myself, So much must go in to making all this content.
The same thing happens at the movie theater. I walk in, see a long list of movies, and choose one to watch and give my money to. These companies are all independent, fighting for my attention… right? Wrong.
While it may seem like there is an overwhelming amount of selection in the entertainment sector, the industry is actually dominated by massive media conglomerates that have dozens of assets. One such example is Viacom VIABVIA .
Based in New York City, Viacom is one of the largest entertainment content companies in the world, reaching over 3.7 billion subscribers in 180 countries. Anyone with a functioning TV and a basic cable package would be hard-pressed to completely avoid a Viacom product.
How It Works
Viacom is broken into two segments: Media Networks and Filmed Entertainment. Luckily for this article, the people over at Viacom are really great at making self-explanatory names.
The Media Networks segment is exactly what it sounds like. This is the part of the company that deals with all of the TV programming and distribution. Viacom owns and operates MTV, VH1, Comedy Central, Spike, Nickelodeon, TV Land, CMT, and BET, amongst others. This segment also controls the company's internet holdings, which includes Ratemyprofessor.com, Shockwave.com, and AddictingGames.
The Filmed Entertainment segment controls, well, filmed entertainment. Viacom owns Paramount Pictures, and this is where it does most of its movie production and distribution. Paramount has been one of the biggest studios in Hollywood for quite some time, and in recent years it has released Transformers , Terminator: Genisys , Mission: Impossible Ghost Protocol , and Iron Man .
Viacom also has some miscellaneous assets, including the exclusive rights to the Teenage Mutant Ninja Turtles franchise and Bellator MMA, the largest competitor to mixed-martial-arts promotor UFC.
The current version of Viacom was created on December 31, 2005, as a spinoff from CBS Corporation CBS . CBS as we know it now used to be called Viacom, but changed its name before spinning off Viacom into its own company.
The previous form of Viacom was founded in 1971 and quickly became highly profitable in the 70s and 80s. The company made a ton of money by syndicating old CBS classics such as I Love Lucy, The Andy Griffith Show, The Twilight Zone, and All in the Family .
Beginning with the purchase of Sonderling Broadcasting in 1978, Viacom launched a string of acquisitions that helped shape the company we see today. In 1985, Viacom took over Warner-Amex, which owned MTV and Nickelodeon. In 2000, Spike and CMT fell under its wing, and in 2001, the company purchased BET.
Year in Review
It has certainly been an interesting year for Viacom and its investors. Well, really it has been a rough year. As of today, the stock is down 45.86% on the year. In short, Viacom's weak year was due to revenue misses in each quarter of fiscal 2015.
Here is how revenue broke down for the Media Networks segment, via Viacom's Earnings Presentation :
Despite weak revenue, Viacom was able to beat or match earnings expectations in three out of four quarters. In fiscal 2015, the company outperformed the Zacks Consensus Estimate by an average of 2.01%.
On top of this, Viacom beats the industry average in Net Margin, Return on Equity, and P/E Ratio. Viacom's ability to post solid earnings in spite of weak revenues, as well as these impressive metrics, should give investors something to hold on to.
Currently, Viacom has a Zacks Rank #3 (Hold). In the past 30 days, we have seen nine revisions for the company's fiscal 2016-three positive and six negative. Right now, Viacom is expected to earn $5.83 per share in 2016, which would represent year-over-year growth of 7.14%. While some signs point upward for Viacom, the overall uncertainty could scare some investors away.
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