On a day when the Dow Jones Industrial Average officially entered market correction territory, and despite disappointing revenue growth in its fiscal first quarter, Viacom stock soared Thursday after the programmer increased its forecasts for distribution revenue growth.
Viacom shares were up as much as 12% to $34.18 each in early trading Thursday. The stock closed at $32.72 (up 7.2% or $2.21 per share) on Feb. 8.
Driving the gains was an upbeat distribution revenue forecast, including possible carriage deals with mobile and over-the-top distributors in addition to traditional outlets. On a conference call with analysts to discuss fiscal first quarter results, CEO Bob Bakish said Viacom was in talks with “multiple carriers” in the U.S., pointing to its recent deal with Spanish telecom company Telefonica as an example of the future.
“I feel very good about our trajectory, far better than I felt this time last year,” Bakish said on the call.
That was despite missing analysts’ targets for domestic ad revenue growth (down 5%) and domestic affiliate fees (down 8%). Analysts had hoped for a 4% decline in domestic ad revenue and a 7% decline in domestic affiliate fees. Viacom said it expects fourth quarter ad revenue to be positive and estimated affiliate revenue will decline in the low-to-mid single digit percentages for the full year. It had earlier predicted mid-single digit percentage declines.
The gains come just as the stock market, hammered over the past two weeks amid investor fears about coming inflation, higher interest rates and increased economic volatility drove stocks down again Thursday. The Dow Jones Industrial Average fell 1,175 points on Monday – its biggest single-day drop ever – but started to climb back in later trading, gaining 567 points on Tuesday. But that was short-lived – the Dow fell 19 points on Wednesday and on Thursday dropped more than 1,035 points (a 4.2% decline) that sent the market firmly into official market correction territory, which is defined as a 10% drop from a recent high. Since its Jan. 26 all-time high the index has declined 10%. Other indices were also battered – the S&P 500 dipped 3.75% on Thursday while the NASDAQ Composite fell 3.9%.
Viacom was the only media stock that showed an increase on Thursday. Other stocks showed stiff losses, like Comcast (down 5%), Charter (down 4.2%), 21st Century Fox (down 4.2%), AT&T (doen 3%), Verizon (down 3.1%), Facebook (down 4.8%), Amazon (down 4.7%), Google (down 4.5%) and Netflix (down 5.5%).