Former Viacom CEO Philippe Dauman figuratively laughed his way to the bank in fiscal 2016, receiving more than $93 million in total compensation in a year when he was ousted in a heated battle with former mentor and controlling shareholder Sumner Redstone.

According to a proxy statement filed with the Securities and Exchange Commission on Friday, Dauman received $93.02 million in total compensation, including $58.4 million in other compensation, mostly consisting of separation payments he received when he resigned from the company in August.

Dauman had been under pressure to leave from his former friend and mentor Redstone, who removed him from the trust that would have controlled his 80% voting interest in Viacom upon his death or incapacitation. What followed were a series of lawsuits where Dauman claimed Redstone was being controlled by his daughter, Viacom vice chairman Shari Redstone, and Redstone accused his former friend of being an incompetent executive.

According to the SEC document, Dauman’s former lieutenant, former chief operating officer Tom Dooley, received about $27.9 million in compensation in 2016, down from the $29.4 million he received in the prior year.  Dooley had served as interim CEO of Viacom after Dauman left, giving up that throne  in November.  Viacom named long-time executive Bob Bakish as acting CEO in October,  raising him to permanent CEO earlier this month.

With Bakish’s ascension, Redstone’s National Amusements dropped its support of a potential merger between Viacom and CBS, its other media holding. In December Viacom officially ended its exploration of the possible merger.

As the date where he will officially become Viacom’s former executive chairman draws near, Philippe Dauman continued to fill his pockets with stock-fueled lucre, selling nearly 750,000 of the programmer’s shares for about $31 million.

This is the third big sale of Viacom stock by Dauman this month. According to SEC documents Dauman sold about 166,000 Viacom shares on Aug. 24 and Aug. 25 for $10.6 million, and shed another 427,000 shares on Aug. 22 and Aug.23 for $17.8 million. With the most recent sales, Dauman has shed Viacom stock worth nearly $60 million in the past few weeks. 

Dauman agreed to step down as Viacom CEO on Aug. 21, after a brutal battle with his former friend, mentor and the company’s controlling shareholder Sumner Redstone. As part of the agreement, Dauman gets to stay as Viacom’s executive chairman until Sept. 13 and will receive a $72 million exit package. Former chief operating officer Tom Dooley was named interim CEO in his place, a role he will fill until Sept. 30, as a permanent replacement is sought. Dooley is in the running for the permanent CEO spot as well.

According to documents filed with the Securities and Exchange Commission, Dauman sold 270,497 shares of Viacom stock on Aug. 26 and 478,784 Aug. 29. At that price, the stock was worth $31 million.

With Viacom turning the page after the long-anticipated ouster of CEO Philippe Dauman and the temporary ascension of chief operating officer Tom Dooley to the CEO spot, all eyes are on what is next for the youth-oriented programmer.

While Dooley reaches out to investors and has vowed to work with Viacom’s board on its future organization and plans, there has been no shortage of suggestions as to where the programmer goes from here, ranging from an outright sale to a more intense focus on kids’ programming.

Dooley, a loyal lieutenant to Dauman for more than 30 years, is officially serving as interim CEO until the end of the fiscal year on Sept. 30. While he is also in the running for the permanent spot, many analysts believe his ties to Dauman and the old Viacom regime limit his chances. As MoffettNathanson senior research analyst Michael Nathanson wrote in a blog post last week, “We wonder how much of an agent of change he will be.”

PLENTY OF CANDIDATES

Analysts have speculated about possible replacements for Dauman for months, but in the past few weeks changes at 21st Century Fox could free up two well-respected executives for the Viacom slot — co-chief operating officer Chase Carey and Jim Gianopulos, head of studio 20th Century Fox Film Corp.

Gianopulos — who some have said would give Viacom instant credibility, at least on the fi lm side — had already planned to step down at the end of the year so longtime executive Stacey Snider could take over the studio. Last week he accelerated that time frame to Sept. 1, which would make him available for the Viacom job.

Carey also could be ready for a fresh start, as Fox CEO James Murdoch and executive chairman Lachlan Murdoch have recently been flexing their muscles — they were reportedly behind the Snider appointment and have taken quick action in the sexual harassment scandal involving Fox News chairman Roger Ailes. Carey, who stayed on to help with the Murdochs’ transition, may feel that it is time to move on. He also has a stellar track record in turning around companies like DirecTV.

Other possible candidates include former The Walt Disney Co. chief operating officer Tom Staggs, who abruptly resigned in April, and former DreamWorks Animation CEO Jeffrey Katzenberg, who sold his company to Comcast earlier this month. Katzenberg walked away from that deal $390 million richer, mainly in the form of vested stock options, and is reportedly more interested in short-form content creation, which he feels is the future of the business.

Whoever takes Viacom’s helm will have their work cut out for them. Ratings and ad revenue has plummeted and more distributors are toying with the idea of doing without some or all of the company’s channels.

CUTTING CHANNELS

Morgan Stanley media analyst Ben Swinburne suggests that a possible turnaround path is to slash the number of Viacom channels from nearly 20 to five or six (MTV, Nickelodeon, Comedy Central, BET and Spike). Swinburne wrote that Viacom should also address its younger audience by drastically reducing ad loads, hold back on SVOD licensing and refocus its attention on Nickelodeon.

“In our view, Nickelodeon is the crown jewel, and has seen some content success of late on both Nick and Nick Jr.,” Swinburne wrote. “We argue building this network(s) is the key to long-term durability of the company, and Viacom may need to (at least for now) leave its content exclusive to its networks and apps.”

Viacom also should make the direct-to-consumer market a priority, Swinburne added, as the market potentially shifts to a place where consumers buy moderately priced OTT apps and bundles to serve their needs.

“For Viacom, investing in the capabilities to move DTC seems critical, perhaps prepping to offer consumers a bouquet of apps focused on kids, music, and comedy,” Swinburne wrote. “Given Viacom’s legacy target audience, it should be leading in this area, experimenting more than others with different models, not following.”

BTIG media analyst Rich Greenfield wrote that an outright sale could be a better path for Viacom shareholders, especially as it is still considering a partial sale of its Paramount Pictures movie studio.

While Viacom’s controlling shareholder, Sumner Redstone, has objected to the partial sale of Paramount, he may be open to selling the whole thing. And with some estimates putting Paramount’s value at $10 billion, it might be a better move for potential buyers to purchase the entire company — which has an enterprise value of about $27 billion — and sell off the pieces it doesn’t want.

CBS DEAL MAY NOT HELP

Greenfield also advocated for a recombination with corporate sister CBS, a move that other analysts have backed. But there is still little incentive for CBS shareholders to press for a deal.

Even Nathanson, who has called the 2006 CBS-Viacom split the biggest mistake the company ever made, can see little in deal synergies for CBS in a recombination. In his blog post, Nathanson estimated that putting Viacom and CBS back together would result in a gain of just 5.6% (or about 24 cents per share) for CBS stockholders.

“While a new CEO might look to fi x all that is wrong at Viacom, we find it hard to believe that anything will be solved until the CBS Viacom pieces are put back together again,” Nathanson wrote.

Shortly after agreeing to step dwon, former Viacom CEO Philippe Dauman sold nearly half a million shares of Viacom stock.

Dauman disposed of 200,000 Viacom B shares on Aug. 22 and another 227,046 share on Aug. 23 at almost $42 a share, according to a filing with the SEC. Total proceeds from the sales were $17.8 million.

Dauman continues to own more than a million shares of the media company. Viacom stock closed Wednesday at  $41.34 cents a share, down 0.86%, making Dauman’s remaining holdings worth $41.4 million.

Read more at broadcastingcable.com.

Viacom’s EVP of corporate communications Carl Folta is stepping down after more than two decades at the entertainment conglomerate, interim CEO Thomas Dooley told employees in a company memo Tuesday.

Folta started out with Gulf + Western in 1984 and joined Viacom after the 1994 merger with Paramount Communications. Since then, Folta “has been on the front lines of every major initiative and transaction in the history of our company,” Dooley said in the memo. “Nobody fought harder for Viacom and all of us. Not only did Carl guide the company through some of the most active and challenging periods in the media industry, but he also helped Sumner Redstone become one of the most recognized and globally acclaimed media executives in history.”

Folta was the chief spokesman for Redstone and later for CEO Philippe Dauman. His decision comes about three days after Dauman announced that he would step down as CEO effective Sept. 13.

Folta was well-respected by the press that covered the company and was known as a straight-shooter with a vast knowledge of Viacom operations. He also was the catalyst behind some of Viacom’s most successful social initiatives, including KNOW HIV/Aids, the Peabody and Emmy Award-winning cross-platform public education partnership with the Kaiser Family Foundation and was the driving force behind the company’s current partnership with the Bill and Melinda Gates Foundation on Get Schooled, a multi-year educational program for young people.

Viacom CEO Philippe Dauman is out and will be replaced by Thomas Dooley, currently COO, as part of an agreement ending the battle for control of the media company that has been won by 93-year-old mogul Sumner Redstone and his daughter Shari Redstone, according to sources familiar with the situation.

According to a report in the Los Angeles Times, Dooley will serve until the company’s board meeting in September, but could be asked to continue in the job.

Dauman was one of the highest paid CEOs in the U.S. but in recent year’s Viacom’s business has been bad, with ratings dropping at its cable networks and ad revenues declining. Its stock hit new lows earlier this year.

RELATED: Dauman Resigns as CEO of Viacom: Report

Shari Redstone was a rival of Dauman’s for control of her father’s $40 billion media empire, which includes CBS. She also criticized Dauman and opposed his election as chairman earlier this year.

The deal was approved by Viacom's directors Thursday night, but some elements needed to be signed off on before an official announcement can be made.

Read more at B&C.

Viacom CEO Philippe Dauman has reportedly resigned and will be replaced by Thomas Dooley, COO, as part of an agreement ending the battle for control of the media company that has been won by 93-year-old mogul Sumner Redstone and his daughter Shari Redstone.

According to a report in the Los Angeles Times, Dooley will serve until the company’s board meeting in September, but could be asked to continue in the job.

Dauman was one of the highest paid CEOs in the U.S. but in recent year’s Viacom’s business has been bad, with ratings dropping at its cable networks and ad revenues declining. Its stock hit new lows earlier this year.

Shari Redstone was a rival of Dauman’s for control of her father’s $40 billion media empire, which includes CBS. She also criticized Dauman and opposed his election as chairman earlier this year.

The settlement would end lawsuits in Massachusetts and Delaware and allow the Redstones to add five new directors to Viacom’s board.  The new directors include Judith McHale, former president of Discovery Communications; Ken Lerer, an investor in companies including Buzzfeed; and Nicole Seligman, formerly president of Sony Entertainment.

Five current board members who sided with Dauman will depart over the next few months.

Dauman will remain as non-executive chairman until next month and will be able to present to the board his plan to sell 49% of Paramount Pictures. The Redstones have opposed the sale.

Read more at broadcastingcable.com.

A decade after he was unceremoniously ousted as CEO of Viacom, Tom Freston had some harsh words for his replacement, telling CNBC Wednesday that Philippe Dauman has led the once proud media company through a “series of errors” and should be removed.

The former chief’s comments came as Dauman is fighting a battle for survival with Viacom’s largest shareholder Sumner Redstone, who has ousted the current CEO from the trust that will control his shares after his death or incapacitation. Earlier Wednesday (June 15), Redstone sent an e-mail to Viacom board member Fred Salerno stating that he no longer trusted Dauman or the board.

Freston, who helped create MTV and countless other Viacom networks, was fired in 2006, reportedly for a failure to buy then-online jewel MySpace. News Corp. snapped up MySpace in 2005 for $580 million. Six years later it was sold for $35 million, a fraction of its original value.

Freston said Dauman has failed to embrace the digital culture that is at the heart of Viacom’s core audience – kids, teens and young adults – instead adopting a litigious stance that has backfired.

“Litigation became a key tool,” Freston told CNBC, according to a transcript. He pointed to Viacom’s decision to sue YouTube in 2007 for $1 billion for copyright infringement instead of recognizing that the online video pioneer was becoming a top destination for young viewers and trying to establish a relationship. That decision, Freston said “froze Viacom for years on the sidelines, unable to really make any digital moves.”

Viacom finally settled the suit in 2014, which Freston said netted the  programmer nothing, but cost them “tens and tens of milions of dollars” to litigate.

“There’s been a series of pretty serious errors,” Freston said.

While he didn’t believe it was is place to call for Dauman’s removal, Freston said Daman hasn’t been “the optimal leader for the company” and that he isn’t the right man for the job.

That right man would be someone familiar with pop culture and young audiences.

“The person who holds that chair should be somebody who is turned on, attracted to and somewhat knowledgeable about the creative community and the popular culture and what's going on there, and to be able to telegraph that and inspire the employees of the company behind that vision,” Freston said. “You can't run an entertainment company through lawsuits.”

Freston said he would not come back to the run the company, nor has he been asked to, adding that he has moved on with his life and is an investor in Vice Media, the millennial-focused media conglomerate. 

Viacom still has great brands, the former CEO said, and could be rejuvenated with a younger board and new, creative management.

“By no means have they reached the point of no return, and I think they could be rejuvenated,” Freston said. “America loves a second act.”

But he also wondered why Dauman, obviously under pressure from Redstone to throw in the towel, still holds on.

“For me, when the Redstones don't want you, when Wall Street doesn't seem to want you, and when from what you can hear, there's not a huge amount of support for him in the company, you've got to wonder what's the game he's playing,” Freston said. “What's the point?”

In a statement, Viacom said the company is “significantly bigger, more global and generates far more profits today than when Philippe Dauman's predecessor left office in 2006."

The statement continued: "Philippe has doubled the amount of investment in creative programming over his tenure to more than $6 billion annually, and has grown Viacom to be the #1 family of cable networks and the #1 destination on all of television for reaching younger audiences. Philippe has overseen substantial and consistent growth in the company’s international business, which is now on track to generate $1 billion in revenues by 2020. Viacom is making more global hits than ever before, exemplified by recent successes such as Lip Sync Battle now airing in 96 countries. Philippe has also brought in new creative leadership to reposition key networks, which is now driving ratings turnarounds, and has overseen an overhaul of the company’s advertising sales engine to deliver innovative data-driven products. The company has generated billions of dollars in new distribution revenues from emerging digital platforms while at the same time more than doubling affiliate revenues since 2006.”

As the battle for control of Viacom continues to be waged in the courts, Telsey Advisory Group media analyst Tom Eagan said he was “cautiously optimistic” about the overall pay TV ad climate, adding that replacing Viacom executive chairman and CEO Philippe Dauman with 21st Century Fox vice chairman Chase Carey or DreamWorks SKG chief Jeffrey Katzenberg could help boost the stock.

Viacom stock was down about 40% in the 12 months prior to moves by its controlling shareholder Sumner Redstone to remove Dauman from the trust that will manage his shares in the event of his death or incapacitation. That battle still rages in Massachusetts Probate Court and elsewhere and has cast a pall on the overall company, but has been understandably good for the stock. Viacom shares have climbed during the cat fight, up a total of 7.2% since May 20. And all of that growth can be attributed to the growing possibility that Dauman, who has been under fire for poor decision making over the years, will be ousted from the C-suite. Dauman joked at the Gabelli Movie & Entertainment conference last week that it was better to create content than become it, but his fate appears to be the only thing concerning investors at the moment.

Carey, who became Fox vice chairman in 2015 and is largely in that role to help founder Rupert Murdoch’s sons James and Lachlan transition into eventually running the whole shooting match, has a stellar track record with troubled companies. He basically resurrected DirecTV when he was CEO at that satellite TV service provider in 2003 and stayed about six years, returning what had been a struggling operation to robust subscriber growth, before returning to then-Fox parent News Corp. in 2009. Carey helped News Corp. through the split that created two separate companies – Fox, the programming arm and News Corp. the publishing arm – unlocking value for both. While there is little doubt he could help Viacom – he has been running content businesses for most of his career – the question is whether he would want to take on the challenge. Viacom, which has struggled with declining ratings and sluggish ad growth, may be too far gone for the seasoned executive to even bother.

Katzenberg, who helped create Disney’s modern animation business and has had some successes with DreamWorks – like the Madagascar and How to Train Your Dragon series of films and TV shows – will step into an advisory role after the sale of the content creator to Comcast’s NBC Universal is completed later this year. Katzenberg, 65,  has the content chops, particularly in the kids’ business, but again it could be a question of whether he wants to take on the challenge.

There are other experienced executives in the pool – Eagan said former Disney COO Tom Staggs also would be cheered by Wall Street – so there is no shortage of possible replacements.

And like other analysts who have pointed to the structure of the trust and the board make-up, it doesn’t really matter if Redstone is declared incompetent or not.

“The Redstones have already won,” Eagan wrote.    

In the meantime, the traditional pay TV networks business, thought to be on its way out as over-the-top services and skinny bundles transform the industry, is expected to be surprisingly strong.

Eagan expects the strong scatter market will continue into the Upfront negotiations and third quarter spending. He believes that the move toward cross platform measurement in the first half of next year will help comparables, but expects CBS, Time Warner Inc., and Fox to generate mid-to-high single-digit ad revenue gains in fiscal 2016.

At Viacom the outlook is less rosy. Eagan predicts Viacom will have “lackluster” fiscal x quarter results, but he believes that performance already is built into estimates.  For the full fiscal year, Eagan expects ad revenue at Viacom to decline about 2%, better than the 2.9% decline in fiscal 2014 but worse than fiscal 2015’s 0.7% deficit. Affiliate fee growth of 1.6% in fiscal 2016 is behind the 3.6% rise last year and the 11.3% increase in 2014.

In contrast, Eagan expects CBS to grow ad revenue by nearly 10% in 2016, up from a 3.3% decline in 2015, while affiliate fees increase 4.1%, compared to 0.5% growth in 2015.

Greasing the tracks of the absolute train wreck Viacom executive chairman Philippe Dauman’s and largest shareholder Sumner Redstone’s relationship has become, BTIG media analyst Rich Greenfield suggested that Viacom stockholders should sue the media company’s  independent directors.

In a blog post Thursday, Greenfield said shareholders have a case because it is obvious given Viacom’s recent performance, that independent directors haven’t held up their end of the bargain to act in all shareholders’ best interests.

Six of Viacom’s 11 board members are classified as independent. But Greenfield argues that although they have a fiduciary duty to look after all shareholders’ interests, instead they have rubber-stamped an ill-advised share buyback program that he says “squandered” liquidity and raised leverage; Okayed promoting Dauman to executive chairman and making him the third-highest paid CEO in the U.S., despite continued operational failures under his watch and now is trying to solve its debt problems via a sale of a 49% interest in its Paramount movie studio. Greenfield views the Paramount sale as “misguided.”

All that should give shareholders more than enough fuel for lawsuits, Greenfield wrote. Adding more logs to the fire is that, according to the analyst, the Viacom board is using company funds to finance Dauman’s and board member George Abrams lawsuits against Redstone to block his removing them from the trust that will control his shares upon his death or incapacitation.

The analyst has already noted that given the structure of the trust’s board, there is no way for Dauman or Abrams to be reinstated, even if they do win.

He added that the independent board members should oust Dauman and end the financing of the Dauman/Abrams lawsuits immediately or face removal themselves.  

“Viacom’s board is delaying the inevitable and wasting company resources,” Greenfield wrote. “The best course of action is to act swiftly to enable Viacom to refocus on the operational challenges at hand, bring on new management and pursue a merger with CBS at market.”

Embattled Viacom executive chairman and CEO Philippe Dauman, locked in an increasingly bitter fight with the media company’s largest shareholder Sumner Redstone, joked that he preferred to create content than to be it, told a mainly sympathetic audience at an industry conference that the company plans to go ahead with its Paramount movie studio sale, albeit on a longer schedule.

Dauman has traded lawsuits with Redstone ever since the media mogul kicked him off the trust that would control 80% of Viacom’s voting shares in the event of his death or incapacitation.  Dauman has filed suit in Massachusetts Probate Court to block the move, claiming Redstone no longer has the mental capacity to manage his affairs and that Redstone’s daughter Shari is exacting undue influence on her father.

Dauman opened his session at Thursday's Gabelli Movie & Entertainment conference in New York, briefly addressing the stand-off.

“I’ve been involved with the company for more than 30 years and this is certainly unique, and the one takeaway I have is, it’s a lot more fun creating the content than being the content,” Dauman said. He thanked Viacom’s employees for continuing to create great content “despite everything that is going on.”

Dauman then launched into a presentation describing Viacom’s business – Nickelodeon is doing “great,” with the top three animated shows on cable and “a lot of vitality.” He also said Viacom has successfully renewed its biggest cable distribution deals over the past two years, adding that the programmer doesn’t have a major negotiation for this fiscal year or next.

As for its movie studio, Paramount Pictures, plans are still to go ahead with the sale of a minority interest. While that sale has been the source of much of Redstone’s ire – he recently changed the bylaws of the holding company that contains his Viacom shares that would prevent a Paramount sale without a unanimous board vote.

Dauman said that originally Viacom had fielded interest in buying the stake from about 40 companies and is now having more detailed discussions with a smaller list of players. While those negotiations are going forward, he said in light of “recent events,” the company will miss the June 30 deadline for the sale.

“We are continuing to explore the potential of unlocking value with select partners with strategic value,” Dauman said.

Still, Dauman said that whoever buys the stake would be an “interesting partner” for Viacom as well. He estimated the sale would unlock about $10 or more per share of value for Viacom shareholders, helping the company move forward with its strategic plan and provide cash to help pay down debt.

A decade after the split that was supposed to unlock the hidden value inside Viacom, some pundits are calling for the home of MTV Networks to put the old band back together by recombining with broadcaster CBS in an aggressive move to restore value and clout to the once-powerful cable networks.

Recent moves by Sumner Redstone, Viacom’s ailing top shareholder, to possibly oust CEO Philippe Dauman and the board of directors have brought the conversation to the fore.

But many say stitching Viacom and CBS back together would be a long, costly process that might make both weaker rather than stronger.

SpringOwl Asset Management hedge fund manager Eric Jackson has been one of the loudest proponents of reconstituting the old Viacom, combining the broadcast and cable assets and placing CBS chairman and CEO Les Moonves and his team firmly in charge.

Jackson pins most of Viacom’s woes on executive chairman and CEO Philippe Dauman and thinks a CBS-Viacom recombination would offer cost savings and greater efficiencies, as well as the obvious changes in management.

TARGET: NEW MANAGEMENT

Viacom might indeed rise out of the ashes of its current predicament — but possibly too late for Dauman. “Investors will value other management taking over,” Pivotal Research Group senior research analyst, advertising Brian Wieser said in an interview. “You could literally put anyone in the CEO spot.”

Wall Street’s top candidate would be Moonves, who has overseen a huge resurgence at CBS in the past 10 years, while Dauman has seen Viacom’s value diminish. The biggest question, Wieser said, is if Moonves wants to take on the daunting task of reviving Viacom or would rather continue on his current path of growing’s CBS assets.

Under Moonves, CBS stock has more than doubled in price, to $55.17 from $26.64 per share, over the last 10 years.

CBS expects retransmission-consent revenue to reach $1 billion by year-end (up from “tens of millions” after the 2006 Viacom split) and to more than double to $2.5 billion by 2020.

Moonves has been quick to the attack on the over-the-top front, launching CBS All Access, which last year attracted an estimated 100,000 monthly subscribers. CBS has projected it could have 4 million customers by the end of 2020.

Moonves has deflected merger talk, saying on a 2015 earnings call, “We’re feeling pretty strong about ourselves and don’t need any partners.”

One roadblock could be finding an acceptable premium for Viacom, which currently has an enterprise value of about $29 billion, about the same as CBS’s EV of about $32 billion.

Wieser said a Viacom-CBS combination makes sense on some fronts and there could be tons of synergies across the board, but Moonves and CBS would have to articulate their vision for the company for any recombination to work.

Viacom still has value in that its Nickelodeon networks reach more kids than any other programmer, Wieser said. In the music arena, MTV Networks could recapture some of the lost mojo in that sector with new programming introduced at the most recent upfronts. “It really comes down to whether there is a fundamental belief in the durability of the assets,” he said. “I believe there is value in the assets, but it’s understandable why some don’t have that view.”

Others, like Telsey Advisory Group media analyst Tom Eagan, think the risks would outweigh the rewards, adding that Viacom’s problems could also be solved with time and the move toward Total Audience Measurement.

Total Audience, which is beginning to emerge from ratings companies Nielsen and comScore, potentially will track all viewership all of the time, even those elusive viewers who watch content on every device but their TVs.

CROSS-PLATFORM ELEVATION

One of Viacom’s biggest problems has been declining ratings at its youth-oriented networks, which have driven ad sales down and made the company vulnerable in affiliate-fee negotiations.

“The inclusion of more cross-platform measurement is going to help Viacom,” Eagan said. “You could arguably say it will help them more than any other cable-network group, because so much of their viewership is off-linear. But they need to be able to monetize it.”

Wieser wasn’t so sure that Total Audience would be Viacom’s magic bullet. He believes the company’s problems are much deeper, even more than its failure to develop shows its core audience wants to see and the loss of talent like Comedy Central’s Stephen Colbert and Jon Stewart.

“The fundamental problem Viacom has is, it has a controlling shareholder,” Wieser said. “Investors never seem to care [about that] until things go badly.”

Keryn Redstone, one of media mogul Sumner Redstone’s granddaughters, said she will side with the Viacom board against her aunt Shari Redstone in the battle over his media empire.

She said Shari Redstone was able to “effectively kidnap, brainwash and take advantage of [her] grandfather due to his debilitated state of mind and frail health” so her aunt could control his assets.

The Viacom board has accused Shari Redstone of having an “undue influence” over Sumner Redstone as he moves toward replacing Viacom’s directors and management, including CEO Philippe Dauman.

A suit by Dauman and another Viacom director, George Abrams, charging that a move to remove them as trustees of Sumner Redstone’s trust, which holds a controlling interest in the company that owns 80% of the voting rights for Viacom and CBS, will be heard next week in a Massachusetts court.

Related:The Philippe Phactor [subscription required]

On Wednesday, Keryn Redstone rejoined the fray, issuing a statement that said that Sumner Redstone’s health has deteriorated and that he has been incompetent since October.

“The last time that I saw my grandfather was on Valentine’s Day for fifteen minutes," she said. "As he sat there lifeless and flanked by his nurses and caretakers, he seemed unaware of his surroundings. It was one of the most surreal experiences of my life."

Keryn Redstone also said Shari Redstone orchestrated the removal of Manuela Herzer as her grandfather’s companion and overseer of his health care, and has kept the Viacom board from communicating with him.

‘Because I was in the house, I know that my grandfather has been incompetent since last October," she said. "This is why Shari is keeping me away, because I will not lie or conceal the truth about my grandfather’s condition. I love my grandfather and I cry myself to sleep every night knowing that I might never see him again."

Keryn Redstone has hired the same lawyers who represented Herzer in her unsuccessful suit to have Sumner Redstone declared incompetent to make health care and financial decisions.

“I do not intend to let Shari get away with this outrage,” she added. “I will soon be announcing legal steps to join with the Viacom directors in our common cause to liberate my grandfather from Shari’s clutches and protect my fellow trust beneficiaries and myself from her machinations.”

Read the full text of Keryn Redstone's statement at broadcastingcable.com.

As Viacom’s controlling shareholder Sumner Redstone continues to make moves to oust the company’s board of directors, the lead independent board member, former Verizon vice chairman Fred Salerno, issued a letter to shareholders stressing that they will continue to fight in the best interests of the company.

Redstone has been setting the wheels in motion to remove the board, including his former friend and confidant executive chairman and CEO Philippe Dauman. Dauman has filed suit in Massachusetts probate court to block Redstone's actions, claiming that his daughter Shari Redstone is exerting undue influence on her father.

Related:The Philippe Phactor [subscription required]

Salerno has requested a face-to-face meeting with Sumner Redstone, but has been unable to do so. The letter, Salerno wrote, is being issued to let shareholders know what the board is thinking.

“We know that none of us is ‘entitled’ to his or her Board seat,” Salerno wrote. “But we were elected, until our terms expire or we are properly removed, to look after the interests of all the stockholders of Viacom. That is what Delaware law requires – and that is what Sumner Redstone has always expected.”

Salerno said the board believes that Redstone’s actions are out of character and inconsistent with his prior commitment to ensure that an independent board and professional management remain in place at Viacom after his death or incapacitation.

“More specifically, it would be equally inconsistent with his stated judgment for many years that his daughter, Shari, should not control Viacom or his other companies,” Salerno wrote, adding that the board faces a decision: to either fight a removal attempt or just let it happen.

“Acquiescence is appealing – it would remove some of the antagonism and public controversy, and avoid contentious and time consuming litigation,” Salerno wrote. “But to a person we feel the responsibility to challenge in court what we honestly believe would be legally flawed removals.  That is especially so because the flaw we see would be the inexplicable assertion that Sumner was acting of his own free will and with the mental competency to do so.”

Besides Salerno, Viacom’s other independent directors are: senior adviser to the chairman at the World Economic Forum Cristiana Falcone; International Finance LLC president of leadership Blythe McGarvie; Inside Edition anchor Deborah Norville; former Oracle Corp. president and current CEO of Infor Global Solutions Charles Phillips; and counsel to the law firm of Cadwalader, Wickersham & Taft, William Schwartz.

The remaining board members are Sumner Redstone, Shari Redstone, Dauman, attorney George Abrams and Viacom chief operating officer Thomas Dooley. Sumner Redstone controls 80% of Viacom’s vote, and could call a special meeting to remove the board, Given the size of his stake, his wishes would rule the day, save a court order declaring him incompetent.

“We will contest the purported removal if it comes, because we see that as our responsibility to the non-control shareholders of Viacom who own 90% of the equity of the company – and to the legacy of a man we greatly admire and consider a dear friend,” Salerno wrote. “We can do no less than try to make sure that the fates of Viacom, its majority equity holders and Sumner's legacy are ably represented on their behalf and impartially decided by the courts.”

It hasn’t been a good week to be Philippe Dauman.

The Viacom executive chairman and CEO is a regular target of irate shareholders who blame him for the content company’s precipitous fall over the past few years. Now, he’s even taking shots from his onetime friend and mentor, and Viacom’s largest shareholder, Sumner Redstone.

Redstone’s moves to oust Dauman and longtime Viacom board member George Abrams from the trust that will manage Redstone’s controlling stake in Viacom after his death or incapacitation has fueled mounting speculation that Dauman is being forced out.

While Dauman works hard to repair his reputation, signs point to a showdown with Redstone’s daughter and Viacom nonexecutive vice chair of the board Shari Redstone, who has been gaining influence in the trust. Lawsuits have traded back and forth: Dauman to block Redstone’s moves, Shari Redstone to have her father’s wishes upheld.

As the palace intrigue roils on, it might be time to take a closer look at Dauman’s performance by comparing his often-criticized pay package with the rise or fall of Viacom’s market capitalization over the past five years.

Related:Viacom Board Prepared to Fight

There has been much talk of Viacom’s mismanagement and how executives were more interested in cashing massive compensation checks while ignoring trends in the TV business. That is all a matter of perception, though: Few current pay TV executives could have anticipated the rise of OTT players and skinny bundles five years ago, and most didn’t.

At the same time, whether or not its youth-oriented channels make it a canary in the coal mine for the rest of the TV business, one unmistakable fact is that under Dauman and his top lieutenant, chief operating officer Tom Dooley, Viacom has faltered in the past few years.

A quick look at the stock price is evidence of that. Viacom shares are down about 25% since May 2011, shedding about $19 billion in market cap. At the same time, Dauman has received nearly $200 million in total compensation over that span and Dooley received $154 million in salary, stock-and-option awards and incentive compensation.

Since 2014, when Viacom stock was trading in the $80 range, the falloff is more dramatic. Since March 10, 2014, when Viacom shares closed at $88.90 each, the stock is down more than 50% to $39.95 on May 24, subtracting about $20 billion in market cap. Dauman and Dooley reaped a combined $145.8 million in total compensation over that period.

Dauman and Dooley aren’t the only media executives who have been criticized over their pay packages — and they aren’t even the highest paid. That distinction belongs to Discovery Communications CEO David Zaslav, who has received $324.1 million in total compensation in the past five years, skewed mostly because of one-time awards in 2014 that inflated his total pay to $156 million that year. Viacom’s sister company CBS was second, with chairman and CEO Les Moonves receiving $313 million in total compensation in the past five years.

But while Disney chairman and CEO Robert Iger received $199 million in total compensation between 2011 and 2015, for instance, Disney’s market cap soared 144.6% from $41.1 billion to $100.5 billion. CBS is up 105.6% to $54.2 billion from $26.4 billion in 2011; 21st Century Fox is up 69.6% to $28.9 billion from $17.1 billion in 2011; and Discovery is up 23% to $26.8 billion from $21.8 billion in 2011. Viacom’s market cap has fallen from about $35 billion in 2011 to $16.7 billion as of May 25.

Whatever the outcome, some analysts believe Dauman’s days are numbered. In a research note last week, Telsey Advisory Group media analyst Tom Eagan charted out several scenarios that ultimately end with Dauman’s ouster.

In a piece titled “Jersey Shore Has Nothing on This,” Eagan noted board changes at Viacom and National Amusements (the vehicle that holds Redstone’s Viacom stock). “We expect that Sumner and Shari Redstone will attempt to make changes in Viacom executive management, chiefly replacing CEO and chairman Phillippe Dauman,” Eagan wrote. “Although Mr. Dauman has the support of the Viacom board, we expect changes in that board.”

As expected, Viacom executive chairman and CEO Philippe Dauman and board member George Abrams have filed suit in Massachusetts Probate and Family Court to try to block a move by their former boss Sumner Redstone to remove them from the  trust that would manage the company in the event of Redstone’s death or incapacitation.

The suit brings to a head moves over the weekend by Redstone, angered over Dauman’s attempts to sell a minority stake in Paramount Pictures and the overall decline of the media company he helped build. In the suit, Dauman and Abrams are seeking immediate judicial relief and a court ruling to invalidate their removal from the trust.

The two men said in a statement that Redstone’s daughter, National Amusements and Viacom director Shari Redstone is unduly influencing her father, who they claim they have been denied access to.

“Shari Redstone is attempting to illegally hijack her father’s well-established estate plan by removing professional managers and reportedly installing her daughter, an employee and a friend who are firmly under her control,” Dauman said in a statement. “We all continue to have great respect and affection for Mr. Redstone, but he is clearly being manipulated by his daughter, Shari.  After years of estrangement, she has inserted herself into his home, taken over his life, and isolated him from anyone not under her control, including long-time business colleagues.  In fact, she has recently and repeatedly arranged to deny requests for Viacom Board members to meet with her father.  Her singular goal is to assume complete control of his businesses, despite Mr. Redstone’s long-term desire for a professionally managed Trust and an independent Board of Directors.  Shari’s actions amount to an unlawful corporate takeover, and if effectuated, could have far-reaching consequences for thousands of shareholders and employees of Viacom.”

In a separate statement, Abrams said Redstone’s moves are out of character, reflect a “diminished capacity,”  and contradict what have been his wishes for more than 25 years.

“My sole purpose in joining in this law suit is to allow  a court to determine whether Sumner Redstone, in his current diminished capacity, has been subject to undue influence in his recent actions in changing his Trustees and in changing  other documents,” Abrams said in the statement. “ For over 25 years Sumner has discussed his will and various Trusts with me and I was instrumental in setting up this Trust at the time of his divorce.  He has impressed on me his wishes that the Trust be managed in a professional manner and that the children of the son and his daughter be treated fairly and equally despite some internal family conflicts.  He also discussed at length with me his feelings about Viacom and CBS and the future of both companies.  The changes purportedly being made would alter his previously and repeatedly expressed wishes.  As a result of some of the information which has recently  been received, I believe a court test on the question of undue influence is necessary.”

RELATED:Mediacom: 20 Years of Growth | Rocco Commisso: From Calabria to a Cable Chairmanship | Standing Up for Small Cable’s Interests | Viewpoint: Timing Was Right for Rocco

MICHAEL POWELL, PRESIDENT AND CEO, NATIONAL CABLE & TELECOMMUNICATIONS ASSOCIATION

“Mediacom and Rocco are true leaders in our industry. Born out of risk-taking and entrepreneurism, Mediacom has grown into one of our fi nest multiple-system operators, providing to Americans in mid- and smaller-size markets an unsurpassed level of excellence in broadband, video, voice and business services. Rocco has been a passionate and stalwart advocate for cable, demanding that customers should come first, and that public policy should provide the incentives and the means for cable operators to innovate and serve their customers with high value offerings. On a personal note, there is no beer friend to have than Rocco, with his warm and gregarious demeanor and his undying support.”

TOM RUTLEDGE, CEO, CHARTER COMMUNICATIONS

“I have known Rocco for many years. He is a good friend and someone whose personal story would make for must see programming on many networks … not just CNBC. He is also the best thing besides money to come from the banking industry. Rocco has more belief in himself and the cable industry than anybody and his sheer will and guts created Mediacom, a great American success story.”

DAVID ZASLAV, PRESIDENT AND CEO, DISCOVERY COMMUNICATIONS

“Rocco is a true entrepreneur and has really lived the ‘American Dream’ after arriving in America as a kid. He worked hard to earn everything he has built at Mediacom. He has been a strong partner to me for the past two decades and one of the champions who has made this industry what it is today. He is a tough and respected operator with terrific financial acumen, a fighter who believes in his company, a company that 20 years later, he still runs with the passion he had the day he founded it.”

PHILIPPE DAUMAN, EXECUTIVE CHAIRMAN AND CEO, VIACOM

“Rocco is one of the true entrepreneurs in the modern distribution landscape — tenacious, engaged and passionate about his system and the smaller markets it serves. He’s also a quintessential New Yorker, with a well-earned reputation for being a straight talker. Viacom and Mediacom have had great success working together to grow our businesses over the years, and I have a lot of respect for Rocco and his accomplishments.”

JERRY KENT, FORMER CEO, SUDDENLINK COMMUNCIATIONS

“Rocco is not only a friend, he is a hero to the industry. There has been no champion for midsized and smaller operators more relentless or passionate than him. I count myself fortunate to have served as a cable entrepreneur alongside him.”

PAT ESSER, PRESIDENT, COX COMMUNICATIONS

“Mediacom is a great example of the American Dream coming to life and the broadband cable industry it helped build will continue to create opportunities for future entrepreneurs and innovators. Congratulations to Rocco and his team.”

JOSH SAPAN, CEO, AMC NETWORKS

“Rocco embodies the best of what is entrepreneurial and original, qualities that have contributed to the fabric and success of cable TV. His iconoclastic nature and his path less well traveled embody the spirit that makes Mediacom a great company and makes cable a great industry.”

DENNIS WHARTON, EXECUTIVE VICE PRESIDENT MEDIA RELATIONS, NATIONAL ASSOCIATION OF BROADCASTERS

“Congrats to Rocco Commisso on two decades at the Mediacom helm. In exchange for modest carriage fees, broadcasters are proud to provide Mediacom customers with marquee primetime entertainment, the most popular televised sporting events, local news and emergency weather warnings that save lives. We wish Mediacom continued success.”

Viacom president and CEO Philippe Dauman said the cable giant has received a short extension onl its carriage agreement with Dish Network and is hopeful a longer term deal can be reached.

Viacom's carriage deal with Dish's 14 million subscribers was scheduled to expire at the end of the month. Investors were concerned that, given Viacom's ratings pressures, there was a strong chance Dish would consider not carrying the channels.

Dauman announced the extension on Viacom's fiscal first-quarter conference call with analysts, adding he expected a deal can be reached that will be "productive for both sides."

Viacom executive chairman and CEO Philippe Dauman, coming off his own "annus horriblis" in 2015, didn't find much solace in the first quarter of fiscal 2016, as low ratings and a slumping ad market continued to pressure the media giant.

About a week after former executive chairman Sumner Redstone handed the baton to Dauman, and after receiving a 22% increase in total compensation in fiscal 2015, Dauman tried to put an optimistic face on what was a disappointing quarter, with consolidated revenue down 6% to $3.15 billion.

Media Networks, which includes cable channels MTV, Comedy Central and Spike, saw revenue decline 3%, fueled by a 4% dip in domestic ad sales. International ad sales were down 2%, mainly a result of a strong dollar. Excluding the impact of foreign exchange, international ad revenue would have increased by 6% in the period.

Declining ratings and a viewership that is increasingly replacing linear TV with online and mobile content have pressured the company for more than a year. That, and Redstone's declining health and questions around succession at the company, have weighed heavily on Viacom stock, down 45% in 2015.

Dauman has made changes, shaking up management last year and pumping more money into original content, and the Viacom chief said in a statement that those efforts are beginning to show results. Ratings at most of its networks are beginning to show improvement, and Nickelodeon has recaptured its crown as the top network for kids ageds2-to-11.

"2015 was a challenging year operationally as we redesigned ourselves and adapted to significant industry disruption," Dauman said. "Our first fiscal quarter of 2016 reflected these challenges. However, our revitalized organization and our investments in content, technology and strategic innovation are now beginning to bear fruit. Although our industry continues to face headwinds, we expect our positive momentum to continue and build throughout the year."

On the heels of claims from an activist shareholder that it has been paying its top executives way too much over the past several years, Viacom said it has dramatically reduced the compensation packages of its executive chairman Sumner Redstone and CEO Philippe Dauman.

Viacom said in a statement that Redstone’s annual compensation in fiscal 2015 declined 85% to $2 million, versus a total of $13 million in 2014. His salary was unchanged in fiscal 2015. He became ineligible to receive a bonus beginning in fiscal 2015 and has not been eligible to receive an annual equity award since fiscal 2012, the company said.

Dauman’s bonus declined 30% to $14 million in fiscal 2015, versus $20 million in the prior year and his contractually provided salary and annual equity award were substantially unchanged. He received a salary of $4 million in fiscal 2015, versus a salary of $3.9 million in fiscal 2014, and an annual equity award valued at $18.9 million in fiscal 2015, compared with an annual equity award valued at $19.9 million in fiscal 2014.

The news comes a day after shareholder SpringOwl Asset Management issued a 99-page report criticizing the company and calling for the ouster of its management. In the report, SpringOwl claimed that Viacom has paid Dauman and chief operating officer Tom Dooley a combined $432 million over the past five years.

Lawyers for Viacom and CBS chairman Sumner Redstone fired back at his former companion’s claims that he is unaware of his surroundings and unable to make basic decisions about his personal care, claiming the media mogul is as mentally sharp and opinionated as ever.

Redstone’s former companion and self-described caregiver Manuela Herzer painted a disturbing picture of the media boss in a filing in Los Angeles County Court Nov. 24. In that document, Herzer said Redstone had become “a living ghost,” after his former girlfriend, 50-year-old Sydney Holland left him in August.

“Those who know him now describe him as vacant, unable to reliably communicate, unaware of his surroundings and without interest in things that used to excite and engage him,” Herzer said in the filing.

The 92-year-old Redstone’s health has become a concern as the chairman has stepped away from participating in quarterly earnings conference calls and missed both Viacom’s and CBS’ annual shareholder’s meetings this year.

Redstone controls about 80% of Viacom and CBS through his National Amusements Inc. A trust consisting of seven members, including Viacom CEO Philippe Dauman, Redstone’s daughter and National Amusements president Shari Redstone, will have voting control of both companies after his death. 

Herzer laid out in excruciating detail Redstone’s current health state, including his daily demands for steak and sex (neither of which he is supposed to have under doctor’s orders). She states that Redstone is incontinent, requires the suctioning of phlegm and fluid from his lungs 15-20 times per day and almost all of the night, communicates mainly through grunts and cannot initiate a conversation.

Herzer claims she was in charge of making most of Redstone’s health decisions from April 2013 to Oct. 12 of this year, when she was asked to leave Redstone’s home by his estate lawyer. On Oct. 16 Dauman, a long-time confidant of the chairman, was put in charge of his health care.

In response to Herzer’s statements on Nov. 25, Redstone’s own lawyers said the Viacom chairman is in good spirits, has control of all of his mental faculties and is fully aware and engaged.

“Let’s be blunt. Ms. Herzer’s baseless demands and allegations are an attempt to take discovery in service of building a record for the post-death trust contest she intends to bring, and have nothing to do with any present (let alone urgent) concern for Mr. Redstone’s protection,” the filing states, adding that he  continues to be under the care of his long-time physician Dr. Richard  Gold and “has the best care money can buy.”

 “This litigation is a farce and it should be summarily dismissed,” the filing continued. “If Ms. Herzer wants to challenge Mr. Redstone’s estate plan, the very least she could do is wait until he dies.”

The filing also included a statement from Dauman, who had visited Redstone in October and November and found the chairman to be “engaged, attentive and opinionated as ever.”  He continued that at a November meeting he and Redstone spoke on several topics, including the business, watched a basketball game and spoke about a movie he had seen recently.

Dauman admitted that Redstone has “a substantial speech impediment,” but said he speaks to him several times a week by telephone and visits with him monthly.

Sluggish ratings and a strong dollar helped drag down Viacom's fiscal fourth-quarter results, with domestic ad sales dipping 7% in the period.

The ad performance was better than the 9% domestic decline in fiscal Q3.

Overall, revenue was down 5% in the quarter to $3.8 billion, but excluding the impact of the strong U.S. dollar, the decline would have been 2%. At Viacom Media Networks, total revenue increased 5% to $2.8 billion, driven by gains in affiliate fees and a boost in international ad revenue. Operating income at the unit was down 6% in the quarter to about $1 billion. Viacom said domestic affiliate fees rose 15% in the period and international affiliate revenue was up 10%. International ad sales rose 45% in the period.

“Viacom's fourth-quarter and year-end results are indicative of our progress in key areas, including recent ratings improvement and renewals of important distribution agreements," CEO Philippe Dauman said in a statement. "Our strategy of increasing and accelerating investment in original content and expanding our profitable international footprint are among the major factors driving this success, which we believe will continue in 2016 and beyond. We are making great progress in tackling industry-wide inefficiencies in audience measurement, while expanding our audience reach with landmark distribution agreements.

"Viacom's family of Media Networks are the most watched by highly coveted younger audiences, and we are building engagement on all platforms, leading to first-of-their-kind marketing opportunities with our advertising partners," Dauman added. "Our investment in content continues to grow, supporting an unprecedented amount of quality original programming and a more robust slate of films. In addition, in fiscal 2015 we launched 21 channels overseas - including six in India - fueling the fastest international growth in our history.”

In the never-ending battles between distributors and programmers, Dish Network dodged a bullet when it avoided prolonging what it called the largest broadcast blackout in history by signing a last-minute deal with Sinclair Broadcast Group.

But the satellite giant may be in the crosshairs of another programming scuffle, this time with troubled kids’ and teens programmer Viacom.

Dish and Sinclair reached their agreement on Aug. 26, a day after the broadcaster darkened 129 stations in 79 markets across the country and mere hours after Federal Communications Commission chairman Tom Wheeler called for an emergency meeting to work out a solution. At that meeting, Wheeler gave the parties a midnight deadline to hammer out a deal. The agreement in principle was reached later that same day.

While FCC intervention in retrans spats is nothing new — former chairman Julius Genachowski did it on several occasions during his tenure — Wheeler made no bones about his desire to get his agency deep into the mix when it comes to service disruptions.

In a statement, Wheeler said the commission would not “stand idly by while millions of consumers in 79 markets across the country are being denied access to local programming.”

“The commission will always act within the scope of its authority if it emerges that improper conduct is preventing a commercial resolution of the dispute,” Wheeler added.

While the uproar has centered on retransmission-consent blackouts, service disruptions of all kinds are beginning to attract attention as consumers, distributors and content providers jockey for position. And the next biggest test could be Dish’s upcoming renewal of Viacom’s 14 networks.

Dish and Viacom still have plenty of time to reach a deal. While neither side has said when their carriage agreement expires, Deutsche Bank media analyst Bryan Kraft estimated the two parties could reach an agreement in spring 2016. That’s at least six months away, but early-stage talks have taken place already, a common practice in major deals like this.

So far, neither side has taken part in the usual posturing that typically precedes such negotiations. Dish chairman and CEO Charlie Ergen has said publicly that the satellite giant has had cordial negotiations with Viacom in the past, while hinting that networks that have ratings troubles and are available over different platforms sometimes lose value.

Viacom CEO Philippe Dauman also hasn’t mentioned Dish by name, but said earlier in the month — on an earnings conference call after it had reached deals with Mediacom Communications and Charter Communications — that Viacom looks “forward to renewing other affiliate agreements going forward.” Later he added that Viacom still intends to deliver high single-digit percentage affiliate fee increases for the year.

And though Viacom is still believed to be at a disadvantage in negotiations with Dish and other carriers, it appears the momentum that seemed to be squarely in Dish’s camp just a few months ago is eroding. That could be significant, especially since several analysts have called the Dish renewal “critical” for Viacom. If Dish decides to drop Viacom’s networks, other large distributors could also decide to take the plunge, which would be a devastating loss for the programmer.

But shedding the networks, which include such iconic brands as MTV, Nickelodeon, Comedy Central and Spike, could result in subscriber losses for the satellite giant as well. And at this stage, Dish may not be so keen on losing more customers.

Dish officially lost a total of 81,000 net subscribers in the second quarter, about twice the 44,000 it lost in the same period in 2014. But those results are a bit skewed because they also included subscribers to Dish’s over-the-top service, Sling TV. Factor out the estimated 106,000 subscribers Sling TV probably gained in the quarter, and the losses at the satellite-TV unit could have reached 187,000, a level MoffettNathanson principal and senior analyst Craig Moffett characterized as “horrific.”

Given the declines and other setbacks in August, like the FCC’s decision to disallow $3.3 billion in discounts Dish received from its participation with so-called “designated entities” in the recent AWS-3 spectrum auction and DirecTV’s recently completed merger with AT&T — which gives Dish’s largest competitor a major broadband product — the satellite giant may want to take a lower profile in negotiations.

“Dish does seem to have less leverage than the cable/telco players as they don’t have a high-margin data pipe to fall back on, but the rating/programming weakness at Viacom and the fact they don’t control a national [distribution] network seems to put Viacom in a relatively tough position,” Pivotal Research CEO and senior media & communications analyst Jeff Wlodarczak said. “In the end, the signs point to a deal that neither player is probably too happy about.”

Wlodarczak added that the threat of Dish dropping the channels — and the domino effect it could have on other deals — could force Viacom to be more amenable to a compromise on rates. Other analysts have estimated that if Dish dropped the networks, other distributors would follow.

Others have dropped the Viacom channels, with mixed success. Cable One, the Phoenix-based smallmarket cable operator, started the ball rolling more than a year ago, and its video-subscriber rolls have fallen by about 20%. Cable One has made a conscious effort to de-emphasize video in favor of broadband — it currently has 487,401 residential broadband subscribers and 385,136 residential video customers. But the loss of those video customers has cut into the bottom line. In the second quarter, Cable One saw revenue fall 1.2% to $202.7 million and adjusted cash flow dip 2.4% to $77.8 million.

Suddenlink Communications, another midsized operator, dropped Viacom’s channels in September 2014 and has shed about 5.8% of its basic-video subscribers in the past 12 months. It lost about 29,000 video customers in the second quarter, about 10,000 more than in the prior year, but explained the losses by claiming that seasonality and a late-quarter rate increase skewed results. Its financial metrics were strong, with revenue up 4.7% and cash flow growth of 8.2% before one-time items.

Said Deutsche Bank’s Kraft, “A look at Suddenlink’s and Cable One’s subscriber trends since they dropped Viacom suggests that any MVPD that is committed to the video business needs to think twice about dropping Viacom.”  

Viacom reported lower earnings for its third quarter as ad revenue at its domestic cable networks continued to fall because of lower ratings.

Net earnings fell 3% to $591 million, or $1.47 a share, from $610 million, or $140 a share, a year ago.

Revenue fell 11% to $3.058 billion. Domestic advertising revenue dropped 9% as ratings declined. Worldwide advertising revenue decreased 2%.

Earnings were even with Wall Street expectations, but revenue was below forecasts.

The results came a day after a big selloff of media stocks because of investor concern that the TV advertising business is weak and distribution revenues are vulnerable.

Operating income for Viacom’s media networks, which include MTV, Nickelodeon and Comedy Central, was down 1% to $1.1 billion. Revenue was up a hair at $2.6 billion.

“Viacom continues to drive change in our business, creating unprecedented levels of original content, forging innovative marketing and distribution partnerships, and prioritizing international growth through organic expansion and strategic investments,” CEO Philippe Dauman said. “Our Media Networks are quickly bringing innovative data-based advertising products to market, broadening our sales capabilities and developing new solutions for marketing partners."

Read more at broadcastingcable.com.