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.
