Viacom Draws Interest for Minority Stake in Paramount Pictures Studio
Entertainment company’s CEO Philippe Dauman confirms ‘some Asian interests’ and backs June completion of deal
‘The players that emerge will be in one or both of two buckets—international and digital technology,’ Viacom CEO Philippe Dauman said. ENLARGE
‘The players that emerge will be in one or both of two buckets—international and digital technology,’ Viacom CEO Philippe Dauman said. PHOTO: HAMPARTSOUMIAN/REX SHUTTERSTOCK/ZUMA PRESS
By KEACH HAGEY
Updated March 17, 2016 7:29 p.m. ET
5 COMMENTS
Since announcing plans to sell a minority stake in its Paramount Pictures studio three weeks ago, Viacom Inc. said it has received interest from three dozen companies, even as Paramount is experiencing a particularly weak quarter at the box office.
In an interview Thursday, Viacom Chief Executive Philippe Dauman said the company is looking for a strategic partner that could help it in its international and digital businesses, as opposed to purely financial buyers such as private-equity firms. He said the size of the minority stake would depend on what kind of additional commercial relationship the buyer could offer Paramount or the wider Viacom, though he emphasized it only would be a minority stake.
“It’s not about people coming in with money—we’re not even talking to them,” Mr. Dauman said, referring to financial investors. “The players that emerge will be in one or both of two buckets—international and digital technology.”
He confirmed that the contenders “include some Asian interests,” and reiterated his commitment to completing the transaction by the end of June.
Mr. Dauman acknowledged that Viacom’s public sale of a stake in Paramount comes at a particularly dark moment for the studio, which has seen profits decline steadily in recent years as its movie roster shrank to about 10 films last year. In this current quarter, two flops—“Zoolander 2” and “Whiskey Tango Foxtrot”—have cost the studio about $100 million, he said.
Advertisement
Operating income dropped from $341 million in 2011 to $111 million last fiscal year.
Ben Stiller, Owen Wilson and Penelope Cruz in ‘Zoolander 2,’ which did poorly at the box office. ENLARGE
Ben Stiller, Owen Wilson and Penelope Cruz in ‘Zoolander 2,’ which did poorly at the box office. PHOTO: ASSOCIATED PRESS/PARAMOUNT PICTURES
“Fortunately, I think this is the low quarter for us in terms of new releases,” Mr. Dauman said, pointing to a lineup of upcoming franchise movies, beginning with Michael Bay’s “Teenage Mutant Ninja Turtles 2” this summer and continuing with a “Transformers” movie every year for the next few years.
He blamed the “slump” of the last couple of years on the fact that the studio failed to meet the target of releasing 15 films a year that he had set several years ago, and said studio head Brad Grey addressed the problem by replacing the president of production last year.
The decision to sell off part of Paramount was the first major strategic move that Viacom made after Mr. Dauman assumed the additional title of executive chairman in February, after 92-year-old Sumner Redstone, his longtime mentor and the company’s controlling shareholder, resigned the position. Mr. Redstone built his reputation as a media titan largely through the hard-won takeover of Paramount in the 1990s.
Mr. Dauman has been under intense pressure from investors as Viacom’s stock price fell more than 40% last year, though it has bounced back somewhat during the past month. Shares closed at $41.48 on Thursday in New York.
Earlier this week, Viacom shareholders re-elected the entire board of directors, despite opposition from proxy advisory firms. On Thursday, the company extended the contract of Tom Dooley, the chief operating officer who has been a key deputy to Mr. Redstone alongside Mr. Dauman for three decades, through 2018. His previous contracted was up at the end of this year.
“We’ve been inseparable and continue to be so,” Mr. Dauman said of Mr. Dooley.
Write to Keach Hagey at keach.hagey@wsj.com
Entertainment company’s CEO Philippe Dauman confirms ‘some Asian interests’ and backs June completion of deal
‘The players that emerge will be in one or both of two buckets—international and digital technology,’ Viacom CEO Philippe Dauman said. ENLARGE
‘The players that emerge will be in one or both of two buckets—international and digital technology,’ Viacom CEO Philippe Dauman said. PHOTO: HAMPARTSOUMIAN/REX SHUTTERSTOCK/ZUMA PRESS
By KEACH HAGEY
Updated March 17, 2016 7:29 p.m. ET
5 COMMENTS
Since announcing plans to sell a minority stake in its Paramount Pictures studio three weeks ago, Viacom Inc. said it has received interest from three dozen companies, even as Paramount is experiencing a particularly weak quarter at the box office.
In an interview Thursday, Viacom Chief Executive Philippe Dauman said the company is looking for a strategic partner that could help it in its international and digital businesses, as opposed to purely financial buyers such as private-equity firms. He said the size of the minority stake would depend on what kind of additional commercial relationship the buyer could offer Paramount or the wider Viacom, though he emphasized it only would be a minority stake.
“It’s not about people coming in with money—we’re not even talking to them,” Mr. Dauman said, referring to financial investors. “The players that emerge will be in one or both of two buckets—international and digital technology.”
He confirmed that the contenders “include some Asian interests,” and reiterated his commitment to completing the transaction by the end of June.
Mr. Dauman acknowledged that Viacom’s public sale of a stake in Paramount comes at a particularly dark moment for the studio, which has seen profits decline steadily in recent years as its movie roster shrank to about 10 films last year. In this current quarter, two flops—“Zoolander 2” and “Whiskey Tango Foxtrot”—have cost the studio about $100 million, he said.
Advertisement
Operating income dropped from $341 million in 2011 to $111 million last fiscal year.
Ben Stiller, Owen Wilson and Penelope Cruz in ‘Zoolander 2,’ which did poorly at the box office. ENLARGE
Ben Stiller, Owen Wilson and Penelope Cruz in ‘Zoolander 2,’ which did poorly at the box office. PHOTO: ASSOCIATED PRESS/PARAMOUNT PICTURES
“Fortunately, I think this is the low quarter for us in terms of new releases,” Mr. Dauman said, pointing to a lineup of upcoming franchise movies, beginning with Michael Bay’s “Teenage Mutant Ninja Turtles 2” this summer and continuing with a “Transformers” movie every year for the next few years.
He blamed the “slump” of the last couple of years on the fact that the studio failed to meet the target of releasing 15 films a year that he had set several years ago, and said studio head Brad Grey addressed the problem by replacing the president of production last year.
The decision to sell off part of Paramount was the first major strategic move that Viacom made after Mr. Dauman assumed the additional title of executive chairman in February, after 92-year-old Sumner Redstone, his longtime mentor and the company’s controlling shareholder, resigned the position. Mr. Redstone built his reputation as a media titan largely through the hard-won takeover of Paramount in the 1990s.
Mr. Dauman has been under intense pressure from investors as Viacom’s stock price fell more than 40% last year, though it has bounced back somewhat during the past month. Shares closed at $41.48 on Thursday in New York.
Earlier this week, Viacom shareholders re-elected the entire board of directors, despite opposition from proxy advisory firms. On Thursday, the company extended the contract of Tom Dooley, the chief operating officer who has been a key deputy to Mr. Redstone alongside Mr. Dauman for three decades, through 2018. His previous contracted was up at the end of this year.
“We’ve been inseparable and continue to be so,” Mr. Dauman said of Mr. Dooley.
Write to Keach Hagey at keach.hagey@wsj.com
1
