Viacom, the owner of MTV, Comedy Central and Paramount Pictures, forecast a low single-digit dip in sales to U.S. pay-TV companies and streaming video services this quarter. Its stock fell nearly 12 percent on Friday.
The media company beat Wall Street's average estimates for fiscal third-quarter revenue and profit, helped by an unexpectedly strong 4 percent jump in such affiliate sales, but investors focused on the downbeat projection for the current quarter.
"As good as the affiliate fee number was in this quarter, it looks really bad in the next quarter," said Brian Wieser, an analyst at Pivotal Research Group. "You won't be able to see investors having overly aggressive expectations after this call."
For the latest quarter, Viacom said U.S. sales to pay-TV affiliates and online video firms such as Netflix, which pay to screen its shows, rose 4 percent to $1.01 billion, largely due to the timing of some deals with streaming video services.
On a post-earnings conference call executives said that bump would not be repeated this quarter, and instead said they expected affiliate revenue to dip.
The meager outlook comes as U.S. television networks and cable providers are struggling to keep hold of viewers as more watch shows and movies on smartphones and tablets. Six of the largest U.S. pay TV providers posted subscriber losses during the past quarter.
As a result, investors are worried that companies like Viacom will not be able to negotiate rate increases from their pay-TV partners.