9/27/17
Company Overview
Company History
Viacom was a distributor of syndicated Central Broadcasting System (CBS) television series. Viacom, which stands for Video and Audio Communications, was started by Central Broadcasting system (CBS) after the Federal Communications Commission (FCC) limited television networks from owning a cable television system or syndicating their own series and shows in the United States (Levi 1999). Due to this requirement by law Viacom became a separate company after CBS distributed Viacom’s stock to its stockholders. The stockholders at the time of the separation was about 70, 000 with over 60,000 subscribers. The company was started by Sumner Murray Redstone who was an executive chairman of CBS. Sumner Redstone who was a business man had already formed his family business known as National Amusement which was a theatre chain. He was the one who helped Viacom to recover from the debt it had accumulated form acquiring various companies. He took part in the purchasing of Blockbuster Entertainment. He has since been in the management until he was said to have dementia. He still owns a big share in Viacom. The company is one of the largest mass media communication company in the world. It has cable networks like Nickelodeon, and comedy central. This paper seeks to analyse the performance of Viacom within its industry and the communications industry globally as well.
In the 1970’s, there were many challenges that hindered the growth of the cable television which include regulations of the Federal Communication Commission, poor infrastructure in the communities (Waterman, 1999). This however did not prevent Viacom from reaching their target audience. Viacom came up with Showtime movie network to compete with home box office (HBO) and it was able to get audience for theatre related films. Showtime movie network became one of its biggest achievements though it was not successful as imagined. Later on, Viacom started to venture into original programming but it did not succeed as they failed in the production of various series that even lead to their cancellation.
Viacom acquired MTV networks which were not doing well at the time. It continued to acquire radio, television stations, and cable channels as a way of expanding and investing for Showtime. Among others that were acquired include: Paramount communication and Blockbuster. However, these acquisitions made Viacom to have huge debts which made the company to sell some of its radio stations to allow the company to pay some if its debts. This move made the company to be more of a motion picture provider than a cable service provider. In 2006 Viacom, which had previously acquired CBS, came to spilt with CBS, each being independent and Viacom was listed in the New York Stock Exchange.
Current Operations
The company is more involved with movie production and has television channels like MTV, Nickelodeon, Comedy Central, Paramount channel, BET, Spike, TeenNick, and Channel 5 (UK) among others which are viewed all over the world. Viacom also owns Black Entertainment Television. Viacom uses social media to communicate with the public and investors on its brands and any other information that is important. It deals with content that is original and to suit the various audiences in the various parts of the world that enjoys their content. Viacom is listed in the New York Stock exchange. It was formerly known as New Viacom International Corporation but later changed its name to Viacom International. In 2005, it was incorporated and is based in New York.
Mr. Robert M. Bakish is the President, chief executive and director. Shari Redstone is the Non-Executive Vice Chairman. Viacom had developed various strategies to ensure that there is growth in the company and to have more and better connections with its audience. It has done this through advertising, expanding relations with cable satellites, mobile through applications, digitally through social media like Facebook, Twitter among others. This strategy was informed form the research conducted in order to reach more audiences.
Current Financial Stability
This will enable potential investor to know whether Viacom has the potential of generating acceptable returns in their future investments. A ratio analysis is therefore important is this case. This analysis will be done in comparison with Sony Pictures Entertainment, which is a competitor of Viacom.
Price Earnings
Price earnings of Viacom 26/09/2017 was 10.42 while the Price earnings of Sony Pictures entertainment is at 26/09/2017 was 38.62. The price earning of Viacom is less than that of Sony pictures, this indicates that there is poor investment by Viacom and therefore making investors shy away for making investments.
Earnings Per Share
The Viacom is at 3.63 while Sony Pictures Entertainment is at 1.47. Earnings per share indicating the company’s profitability and measure the income of each outstanding stock. Viacom has higher earnings per shares than Sony Pictures Entertainment; this is a good indicator for an investor since higher earnings per share makes the stock price of a company rise, therefore, more advantageous to the investor. Thus, the company is in a good place financially based on the above information.
Dividend Yield
The dividend yield for Viacom is 0.80(2.09%) while that of Sony Pictures Entertainment 0.18(0.48%). This is the company’s annual dividend payment. The dividend yield of Viacom is more than those of Sony pictures Entertainment this suggests that Viacom is doing fairly well in the industry and its ventures have good cash inflow. This makes it more appealing to investors. It is therefore advisable for investors to invest in Viacom since there is positive cash flow.
References
Levi F. C. (1999). Reflections on the FCC’s recent Approach to structural Regulation of the Electric Mass Media.
Waterman D.L. J (1999). CBS. Viacom and the effects of media mergers: An Economic perspective.
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