Viacom (VIAB) on Wednesday missed earnings estimates for its fiscal fourth quarter and reported a 15% drop in revenue year over year, but shares nevertheless bounced higher in early trading.
Shares of the media company were up 1.6% to $37.93 on Nasdaq.
For the quarter, Viacom's revenue missed the expectations of Wall Street analysts, coming in at $3.23 billion versus a consensus estimate of $3.3 billion. Revenue was $3.79 billion during the same period last year.
Net earnings of 64 cents per share were down 71% from the 2015 third quarter, when Viacom posted $2.21 in earnings per share. Analysts had expected earnings of 65 cents per share.
The results come after the media giant late last month named Bob Bakish, head of Viacom International Networks, as its new CEO following a bitter dispute over company control. Controlling shareholders Shari and Sumner Redstone in August ousted Viacom's longtime CEO, Philippe Dauman, and now are pushing for the company to reunite with CBS (CBS) . Viacom provided no updates on a possible merger with CBS in its fourth-quarter results.
Viacom's Nickelodeon, MTV and Comedy Central networks have struggled in recent years as its younger audience has shifted away from cable TV and toward streaming services such as Netflix (NFLX) , Amazon (AMZN) Prime Video and Hulu.
The trend was reflected in Viacom's media networks segment, which saw revenue slide 11% year-over-year to $2.48 billion because of declines in domestic and worldwide affiliate revenue, which fell 19% and 16%, respectively.
"On the media network side of the business, ratings headwinds and our strategic decision to reduce unit loads at some of our networks put pressure on advertising growth in the quarter," interim CEO Tom Dooley said in a conference call Wednesday morning.
Adding insult to injury, Sony (SNE) on Tuesday announced that it will stop carrying all Viacom-owned networks on its PlayStation Vue streaming service beginning Friday. In a blog post, Sony said the decision was made to "continue to offer the most compelling value to our fans."
Dooley said on the conference call that the announcement is an "ongoing negotiation" and that the company will "see how that plays out."
Viacom was Sony's first partner for Vue when it launched the service in 2014, according to The Wall Street Journal.
The paper noted investors have questioned how widely distributed Viacom's channels will be in the increasingly popular skinny bundles offered by a number of companies as alternatives to standard pay-TV packages. Bakish in the conference call shed some light on Viacom's exposure to that content market, noting that 11 of its networks will be carried on AT&T's (T) DirecTV Now skinny bundle.
"I would say broadly speaking this is a very exciting development in the category," Bakish said, adding that it presents a "huge opportunity" internationally with the UK's Sky TV offering similar bundles.
Bernstein analyst Todd Juenger said in a Wednesday analyst note that he believes Viacom faces some hurdles entering the digital, on-demand market. The firm has an underperform rating and $31 price target on shares of Viacom.
"We believe Viacom will struggle to keep their network brands relevant in that environment -- but even if they succeed, the economic returns will pale in comparison to the legacy business, amplified by financial leverage," Juenger noted.
Overall, Juenger said Viacom appears to be in a "troubling situation" as the media industry continues to undergo structural declines.
Meanwhile, revenue at Viacom's Paramount Pictures film studio declined 24% year over year to $774 million as theatrical revenue fell 55% to $203 million. The slump in theatrical revenue was due in large part to difficult year-over-year comparisons from the international performance of Mission: Impossible - Rogue Nation, Viacom added.
One bright spot for the company came from its international results, which saw advertising revenue increase 6% during the fourth quarter.
"I believe a lot of our successful international approach can be brought home to the domestic market," Bakish said.