Practically every other sentence uttered by Viacom (NYSE: VIA) President/CEO Philippe Dauman in a Q&A at the day two of the Dow Jones/Nielsen Media and Money Conference featured the words “operating efficiently and prudently” — a fair indication of how dark the media economy is looking right now. Asked about his relationship with with boss Sumner Redstone, the ratings troubles at its cable properties, the unloading of Dreamworks and the economy in general, Dauman sounded cautious, but definite that its previous vigilance will serve it well through the wider downturn.
— Revised outlook: On Friday, Viacom alerted investors that Q3 earnings will come in at least 10 percent short of Wall Street estimates, due to the declining ad revenue. Asked why the sudden revision, Dauman responded simply, “Circumstances change.” Noting the company’s forecast of a 2 percent drop in global ad revs and a 3 percent decrease in the U.S., WSJ’s Merissa Marr asked why haven’t other media companies made similar announcements and what his outlook for next year is. Dauman: “I won’t speculate about what other companies announce or don’t announce. It’s going to be difficult for anyone to project what happens in 2009. It remains to be seen. All I know is that Viacom’s diverse array of holdings — advertising is only 30 percent of our revenues — makes us well-positioned to weather a downturn and to profit when the economy recovers.”
More after the jump…
— No splashy acquisitions here: While ad sales are tanking, affiliate sales remain solid, Dauman said. He mainly pointed to MTV Network’s Rock Band as “the kind of thing that will be increasingly profitable and important to Viacom. We have made some targeted acquisitions, such as Harmonix, the company that makes Rock Band. Paramount just bought a game developer as well, ScreenLife. We were served well by not making a lot of splashy purchases. We’re focusing on our organic growth and don’t plan any major acquisitions.
— On cable: Dauman disputed the feeling that some Viacom cable properties are underperforming. He asserted that Nickelodeon ratings remained strong, but conceded that MTV and BET have seen ratings fall-off. “I’m sure they will recover. Ratings are something we can address, as opposed to directing the wider economy. We have great ratings successes that we can build on. The Hills is one of the top performing series on TV. The MTV Video Music Awards increased in ratings by 23 percent. And last year, it was up too. However, there are certain dayparts which are softening and we are addressing that.” He pointed to online initiatives, like the chat tool/social net game Backchannel, which lets The Hills share details about the show.
— Don’t call it a bailout: The recent government action to inject capital directly into U.S. banks is “encouraging,” Dauman said. “It was frustrating to see the piecemeal approach. The Treasury’s action was misbranded as a bailout. It was a relief to finally see the money from the $700 billion rescue work its way into the market and begin the process of returning liquidity to businesses. That’s good for all of us.”
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