Viacom, Inc. (NASDAQ:VIA) is taking a $785 million write down for restructuring but can the media titan really blame the likes of Netflix, Inc. (NASDAQ:NFLX), Hulu and other entertainment creators and delivery platforms for its problems?
According to Russ Frushtick in an interview on Fox Business, Viacom, Inc. (NASDAQ:VIA) should have seen Netflix, Inc. (NASDAQ:NFLX), Hulu and any other competitors in the online space coming.
Viacom, Inc. (NASDAQ:VIA), in a statement about the massive restructuring cost it is taking, said that the massive charge reflects “accelerated amortization of programming expenses associated with a change in the company’s ultimate revenue projections”. These projections are for “certain original programming genres that have been impacted by changing media consumption habits,” the company said.
In other words, Netflix, Inc. (NASDAQ:NFLX) and others like YouTube have radically changed the way people consume content.
It can be said that the group Netflix, Inc. (NASDAQ:NFLX) is a part of give people a lot of choices, therefore shows that Viacom, Inc. (NASDAQ:VIA) is buying for reruns are less valuable than initially thought.
According to Frushtick, there is little demand for old shows now which Viacom, Inc. (NASDAQ:VIA) bought to have reruns. People are expecting new content, the technology consultant said and the Internet is giving them a constant stream of content to consume.
If people are getting their new content from the Internet, there’s no reason why people would want to turn on their televisions and go to MTV to watch a rerun of a show they have already watched in the past, he added.
In the past five years, the shows Viacom purchased like Spongebob, Community and CSI were top-tier shows, the analyst said, but in the current landscape, they are just not as highly ranked.
Furthermore, Frushtick said that reality shows which Viacom’s channels like MTV are fond of producing have also decreased in value and viewership. This is why even though reality shows are relatively cheap to produce, the company is still having problems with content and viewership.
Frushtick also talked about Ford Motor Company (NYSE:F)’s latest innovations when it comes to automating cars.
Warren Buffett’s Berkshire Hathaway owned about 8.63 million Viacom, Inc. (NASDAQ:VIA) shares by the end of the last quarter of last year. Carl Icahn’s Icahn Capital LP owned about 1.41 million Netflix, Inc. (NASDAQ:NFLX) shares by the end of the same period.
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