by Max Berkowitz
On the business side, Viacom will announce their quarterly financial results on May 1, 2013 on the web. Their stockholders and future investors can call the number given on the website to call in and ask questions. Currently, their stock has recently increased to sixty two dollars. It is a positive change of fifty seven cents and the volume is increasing to 357,865. Walt Disney’s (1) stock is fifty seven dollars and twenty five cents. That is also a positive change in price. News Corp. is $30.16 and CBS is $46.63.
Verizon wants to pay a different way now: They will not package channels together anymore. Now, you will be able to determine the viewership. They will pay by how many people are viewing their show. People are paying up for their favorite channels. This could change the landscape of how the industry looks. This new economic model is called a la carte. There will be no more packaging if this goes through. Here is a video that explains how this system will work. (3)
Viacom announces that it will be giving off debt offerings for a staggering amount. It will be giving out $550 million in debt offering. The sale of these debt offerings have closed on March 14, 2013. The speculation is that they are doing this so that they can repay their debts and repurchase shares under their share repurchasing program. (2)
Fortune 500 Viacom Information
As of now Viacom is ranked number #177 and their revenues are $14.963 Billion.
1. Walt Disney: #66 at $40.893 Billion
2. News Corp. #91 #33.405 Billion
3. Time Warner #103 $28.97 Billion
What happened to all the advertisement revenue?
Many “Big Media” companies such as CBS, Disney, and Time Warner have seen their advertisement revenues stay at a current pace. There is no growth margin to be seen in the future as well. Furthermore, after going through all the numbers and taking out all the advertisement revenue from the political campaign this year and the Olympics it showed that there really wasn’t any growth at all in sales. They project a growth rate of 3.6% this year. In this industry that is not an encouraging number.
News Corp. and Viacom have actually seen decreases in advertising revenue. They expect each one of these companies to get rid of some of their other operations. A lot of the “Big Media” companies are looking to get rid of billboard businesses and publishing operations. (5)
Viacom is also returning to television series production with Paramount. They will be conducting television production business actions with them. This could help create more of a buzz and a bigger following for them. They will be advertising overseas as well with their production of a Spongebob movie. (6)
Attack Against Viacom (7)
Viacom has recently been sued by Cablevision. Cablevision feels that their customers aren’t getting the price they should be paying for Viacom’s networks. Viacom is burdening it’s customers by making them take on shows that they do not want to pay for. The only way customers like Cablevision will get Nickelodeon, MTV and Comedy Central is that they take on smaller channels such as Palladia, MTV Hits, and VH1 Classic. “Viacom effectively forces Cablevision’s customers to pay for and receive little-watched channels in order to get the channels they actually want. Viacom’s abuse of its market power is not only illegal, but also prevents Cablevision from delivering the programming that its customers want and that competes with Viacom’s less popular channels” (8). As stated before, if Cablevision wins this lawsuit then the whole industry could change drastically.
Here is a breakdown of what a CEO makes for a Big Media company. Viacom’s President & CEO Philippe Dauman is receiving $33.45 million this year. What is eye-boggling is the fact that this is his lowest pay day in over six years. Lets breakdown his salary: He makes $3.5 million in salary, $10.27 million in annual stock awards, $1.85 million in one-time stock, $6 million in annual option awards, $11.5 million in non-equity incentives, $54,720 in pension fund, and the one that is incredible is the $269,363 in “other” compensations. The “other” compensations mainly refer to the Viacom aircraft he uses for personal use and for safety.
News Corp Stock Rising
News Corp. stock value is drastically rising because of the new channel they will be launching called Fox Sports 1. They are after all sorts of sporting rights including major games and events. After this year the NCAA will be losing a lot of their Big East teams who are fleeing to the ACC. Fox Sports 1 wants to take over the Big East basketball tournament rights next year. They are also targeting Thursday night National Football Ball League games, and National Basketball League games. Rupert Murdoch, is putting all of his eggs in one basket. This is a huge investment for him. The report is that they are spending $500 million on the Big East. What they are forecasting is revenues for their affiliates to raise $1.1 billion in revenue, which started out at $312 million. Many companies will also pay $1 for the Fox Sports 1 rights to their channel which was raised from a minuscule 22 cents.
The launch date for the channel is in August with Regis Philbin hosting the show. They have been forecasted as a major competitor to ESPN, who dominates the market and has 98.5 million subscribers. There are also other big competitors out there such as NBC sports, CBS sports, MLB Network, NFL Network, etc. Furthermore, Fox Sports 1 will host the World cup in 2018 and 2022. Last year they also purchased 49% of the YES Network which owns the rights to the Yankees. (10)
Time Warner interestingly spinned off a new company called Time Inc. The company is a publishing unit in which many people speculate they will be burdening their debt upon their affiliate company. They are doing this so that they can increase their profits in the television division by raising their stock (which has gone up by 1.3% since the announcement. (11)
1. “The Walt Disney Company: NYSE:DIS Quotes & News – Google Finance.” The Walt Disney Company: NYSE:DIS Quotes & News – Google Finance. N.p., 28 Mar. 2013. Web. 05 Apr. 2013. https://www.google.com/finance?q=NYSE:DIS
2. Viacom, Inc. “Viacom Announces $550 Million Debt Offering.” CNBC.com. N.p., 11 Mar. 2013. Web. 05 Apr. 2013. http://www.cnbc.com/id/100544002
3. “Verizon Seeks to Change How It Pays TV Channels for Shows.” CNBC.com. N.p., 18 Mar. 2013. Web. 05 Apr. 2013. http://video.cnbc.com/gallery/?play=1&video=3000155191
4. “Viacom.” CNNMoney. Cable News Network, 21 May 2012. Web. 05 Apr. 2013. http://money.cnn.com/magazines/fortune/fortune500/2012/snapshots/11294.html
5. Lieberman, David. “TV Advertising Is “Surprisingly Weak” Due To Internet And Economy: Analyst.” Deadlinecom. N.p., 11 Mar. 2013. Web. 05 Apr. 2013. http://www.deadline.com/2013/03/tv-advertising-weakness-economy-internet-analyst-report/
6. Lieberman, David. “Paramount To Return To TV Series Production.” Deadlinecom. N.p., 04 Mar. 2013. Web. 05 Apr. 2013. http://www.deadline.com/2013/03/paramount-viacom-tv-productio/
7. Wall Street Journal Video: February 27, 2013 http://online.wsj.com/article/SB10001424127887323884304578328261904851932.html
8. Lieberman, David. “Cablevision Charges Viacom With Antitrust Violation For Demands To Carry Little-Watched Channels.” Deadlinecom. N.p., 26 Feb. 2013. Web. 05 Apr. 2013. http://www.deadline.com/2013/02/cablevision-charges-viacom-with-antitrust-violation-for-demands-to-carry-little-watched-channels/
9. Lieberman, David. “Viacom’s Philippe Dauman Makes $33.45M In 2012, A 22.4% Cut.” Deadlinecom. N.p., 25 Jan. 2013. Web. 05 Apr. 2013. http://www.deadline.com/2013/01/viacom-philippe-dauman-compensation/
10. Lieberman, David. “Wall Street Predicts News Corp Will Score With Fox Sports 1.”Deadlinecom. N.p., 06 Mar. 2013. Web. 05 Apr. 2013. http://www.deadline.com/2013/03/wall-street-analysts-news-corp-fox-sports-1/
11. Lieberman, David. “Did Time Warner Wait Too Long To Spin Off Time Inc?”Deadlinecom. N.p., 07 Mar. 2013. Web. 05 Apr. 2013. http://www.deadline.com/2013/03/time-warner-spin-off-magazine-publishing-wall-street-reaction/