The picture for Paramount just got brighter.
That’s the message Viacom CEO Philippe Dauman delivered to investors on Thursday after the Paramount film division suffered a big loss in the latest quarter, dragging down results for the overall company.
Dauman, who is seeking to sell a minority stake in the venerable Hollywood studio, seized on Comcast’s just announced $3.8 billion deal for DreamWorks Animation, saying it bodes well for Paramount in its talks with prospective investors.
Paramount, run by studio chieftain Brad Grey, is a much bigger, more established Hollywood player than DreamWorks Animation, according to Dauman.
“It shows you value. DreamWorks Animation is a studio that puts out two movies a year,” he said during the company’s quarterly conference call.
“If you take that and look at the incredible rich history that resides in the Paramount library, it’s huge in quantity and quality. Look at the 15 major movies we put out year after year,” he continued.
Dauman pointed out that Paramount is in the animation business like DreamWorks, putting out franchise movies such as “Sponge Bob” and “Ninja Turtles,” and is growing its two-year-old TV production division as well.
The Viacom boss said talks to sell a stake in the studio were moving ahead and would likely be concluded by the end of June. He said the company was slated to hold more detailed conversations with a handful of potential buyers.
Dauman talked up Paramount even as it latest performance left a lot to be desired. The studio posted a $136 million operating loss in the first quarter, hurt by flops “Zoolander 2” and “Whiskey Tango Foxtrot.” Revenue fell 1 percent at the unit.
Revenue from Viacom’s media networks business, its biggest division, fell 2.9 percent. The unit includes MTV, Comedy Central and Nickelodeon cable television networks. Ad revenue in the period was weak, dropping 5 percent domestically.
“The domestic cable revenue trends will likely lead to more investor concern as advertising decelerated despite a strong ad market while affiliate revenue was negative in the quarter,” said media analyst Michael Nathanson at MoffettNathanson.
The company acknowledged that lower ratings at its cable networks had translated into limited ad inventory to sell, despite a buoyant scatter market.
Viacom also saw a decline in cable subscribers and a rate adjustment due to consolidation in the pay-TV industry, namely AT&T’s acquisition of DirecTV.
Overall, Viacom reported a 2.5 percent decline in revenue — its seventh straight quarterly decline — weighed down by lower domestic ad revenue and a dearth of hits at Paramount.
Shares of Viacom were down 1.8 percent at $43 in morning trading.
