Scorecards 2009: Viacom
Wall Street wants more proof in 2010 that Viacom's businesses are moving in the right financial direction after management has touted its creative resurgence in 2009.
TV ratings and advertising sales trends have improved at many of the company's networks, and Paramount had one of the top blockbusters of the year in "Transformers 2: Revenge of the Fallen." But after three quarters of 2009, Viacom's profitability at both the networks and film units was below the year-ago figures. While the fourth quarter is not in yet, analysts have said the stock remains a show-me story.
Bankers are hoping for a new deal wave, but Viacom remains unlikely to make a major acquisition in 2010. While the company would consider looking at available cable networks in the U.S. or in foreign territories, president and CEO Philippe Dauman said at an investor conference a few weeks ago that "we are not interested in making the big splashy acquisition out there."
But watch out for possible franchise deals, such as the company's recent acquisition of the "Teenage Mutant Ninja Turtles" franchise for $60 million.
Chairman Sumner Redstone averted a sale of his controlling stake in Viacom in 2009, which some on the Street had hoped for as a precursor for a possible sale of the whole firm. With Redstone's power consolidated, sales talk may return only as wishful thinking.
Viacom's stock rose 58% for 2009 as of Friday.
Some of Viacom's businesses will be under the microscope: Whether premium TV service Epix, which Viacom operates in a joint venture with MGM and Lionsgate, can add much-needed distribution partners in 2010, for example.
Among the things to watch in Viacom's film business are its trial partnership with DVD rental kiosk operator Redbox that it recently extended through mid-2010; a push to find more low-cost film hits like "Paranormal Activity;" and the bottom line, which analysts hope will turn consistently positive sooner rather than later.
Films(domestic gross in millions):
Transformers: Revenge of the Fallen ($402)
Star Trek ($258)
Monsters vs. Aliens ($198, distributed for DreamWorks Ani)
Paramount Home Entertanment:
Transformers: Revenge of the Fallen
Madagascar: Escape 2 Africa