NEW YORK ( TheStreet) -- Viacom (VIAB) is trading at its lowest valuation in more than two years, a result of investor concerns about rating declines at MTV and Nickelodeon, the New York-based media company's biggest networks.Yet despite those declines that have led to drops in domestic advertising revenue, MTV and Nickelodeon remain two of the best-known brands in television. Following a series of executive changes, CEO Philippe Dauman is seeking new initiatives to turn around his struggling business at a time when the stock is comparatively cheap, trading at 12.5 times earnings, its lowest valuation since December 2013.
Viacom shares have lost 10% in 2015 compared to little change at the S&P 500.
Much of that decline in stock price is due to weakness on both sides of Viacom's business: advertising, and the licensing fees that pay-TV distributors such as Comcast (CMCSA), DirecTV (DTV) and Dish (DISH) pay to carry the company's networks.
When licensing agreements expire, network owners habitually ask for price increases. But as Viacom's ratings have declined, Dauman's ability to extract affiliate fee increases has weakened. That has created concerns about the company's growth prospects, said Gabelli analyst Brett Harriss.
Although Viacom's global ad revenue grew 3% to $42 million in the fourth quarter ended Dec. 31, domestic ad revenue plummeted 6%, the company said in a federal filing. Lower ratings across its channels resulted in a decline in the average price per unit of advertising.