Viacom Inc, owner of MTV, Comedy Central and Paramount, said Thursday it expects high single-digit declines in revenue from U.S. cable TV operators and online distributors in the first half of 2018, sending its shares down 8 percent.
The company said pay-TV subscribers continued to decline.
The New York-based media company beat analyst estimates on revenue as U.S. advertising sales improved to their strongest since 2014.
However, Viacom expects mid-single-digit declines in U.S. affiliate sales for 2018, with positive sales returning in 2019.
“In the past year, deals representing nearly 50 percent of our subscriber base have been renewed or extended, and we now have no significant renewals until well into 2019,” Bob Bakish, chief executive, said on a call with analysts. “To be clear, this was a significant accomplishment at a critical time.”
Shares of the company were down 7.7 percent at $22.72 in morning trading.
Like other media companies, Viacom has struggled to boost ratings and advertising as viewers increasingly watch their favorite shows on electronic devices and phones.
Bakish, who took the helm late last year, has made improving relations with cable and satellite companies a priority.
Last month, Viacom reached a deal with Charter Communications to put eight of its most popular networks in Charter’s cheapest U.S. cable bundle.
Prior to that deal, Charter had put some of Viacom’s channels in its more expensive packages, part of the reason for the expected affiliate sales drop in 2018, Viacom said.
Revenue from Viacom’s film unit, which includes theater and licensing revenue, grew 2 percent to $789 million from a year earlier.
However, domestic affiliate revenue fell 3 percent to $948 million in the quarter. Analysts had expected a 1.8 percent drop, according to financial data and analytics firm FactSet.
Domestic ad sales were flat at $936 million, while analysts had expected a two percent increase. Still, U.S. domestic ad sales were Viacom’s strongest since 2014, according to a Jefferies report on Thursday.
Net profit attributable to Viacom rose to $674 million, or $1.67 per share, in its fiscal fourth quarter ended Sept.30, from $254 million, or 64 cents a share, a year earlier.
The quarter included a $127 million gain from an asset sale. Total revenue rose 2.9 percent to $3.32 billion.
Excluding items, the company earned 77 cents per share.
Analysts, on average, had expected earnings of 86 cents per share and revenue of $3.23 billion, according to Thomson Reuters I/B/E/S.