Viacom turning around ratings but content work remains, analyst says

Viacom_CREDIT_André-Pierre du Plessis-Flickr
(André-Pierre du Plessis/Flickr)

Viacom is showing signs of recovery after years of struggles with its networks.

Barclays analyst Kannan Venkateshwar said Viacom’s key networks are improving viewership metrics even as the rest of the industry “continues to see deterioration.”

“We note that turning around ratings in media companies in itself tends to take a long time but doing so in the midst of secular shifts and in a demographic that is moving the fastest away from TV, is even more challenging. There is likely to be a lag in the ratings improvement showing up in numbers. However, if sustained, these trends could help Viacom multiples recover some of the gap relative to peers,” wrote Venkateshwar in a research note.

Despite the encouraging trends Barclays is seeing from Viacom's media network segment, it warned that the company still has a lot of work to do on the content front.

“We do believe management priorities (fixing the operational team, balance sheet, cost structure and a more focused programming strategy) are well placed. However, the impacts of these changes are likely to occur with a lag and given the secular backdrop, the company is effectively fighting time. Therefore, we remain on the sidelines for now given that the company is just starting off on its new strategic path and sustainability of recent trends remains to be seen,” wrote Venkateshwar.

RELATED: Viacom CFO says BET turnaround going to take a ‘little bit more time’

Viacom is a few months into its new strategy that designated BET, Comedy Central, MTV, Nickelodeon, Nick Jr. and the soon-to-be-launched Paramount Network as its core, but some of the networks are taking extra effort.

At an investor conference last month, Viacom CFO Wade Davis said BET is going to need a “little bit more time” to recover in terms of ratings and aligning itself with Viacom’s multiplatform approach for its core brands.

“We’re looking at ways to be more focused on how we schedule that network,” said Davis, adding that BET is getting a comedy block where Viacom will borrow programming that appeals to BET’s core audience from other networks like VH1.