A Nick in Time: Viacom, Inc. (VIAB), Ads and Streaming

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So advertising can still get it done, apparently.

That’s a surprise to me, frankly. To think that a company like Viacom, Inc. (NASDAQ:VIAB) can still see growth in the ad sales of one of its – admittedly flagship – cable networks in this age of cash-for-content is a confusing sign.

Viacom, Inc. (NASDAQ:VIAB)

All the recent data indicates that consumers are moving away from ad-supported media, yet still Nickelodeon – which is owned by Viacom, Inc. (NASDAQ:VIAB)– saw ad revenue grow 7% year-over-year. That, in the face of analyst predictions that sales would drop 1%, is enough to boost Viacom a bit in the markets – nearly 3% in one day.

Viacom – investment worthy?

12 month growth P/E EPS Div. Yield Net Margin
39.1% 15.5 4.24 1.7% 17.2%

Look, Viacom is diverse. It’s more than just one cable channel; it’s a lot of them, and a big chunk of the company also makes content for distribution. It’s a large firm with many revenue streams. Still, the fact that the company can make some money – instead of losing it – on a kids network is an interesting development.

Everything about the company screams investment worthy – the growth, dividend, EPS and margin are all where you’d want them to be for the industry. Even the P/E of about 15.5 just shows that others think it’s worth investing in, even if they haven’t gone overboard about it.

Most interesting of all, the world seems to think that Viacom, Inc. (NASDAQ:VIAB) can keep it up even in the face of streaming. That’s the real challenge. Can traditional advertising survive in the face of people being willing to pay directly for content that doesn’t include ads? It’s only one data point, but the Viacom news indicates that there’s an opportunity to do so.

Streaming dreaming

The issue confronting Viacom, Inc. (NASDAQ:VIAB) is whether the company will be able to negotiate its deal with Netflix, Inc. (NASDAQ:NFLX) .

Netflix

12 month growth P/E EPS Div. Yield Net Margin
154.2% 510.5 0.42 n/a 0.5%

The deal that Viacom has with Netflix is set to expire this month. That’s a significant cash-blow to Viacom if the firm can’t come to some terms. Viacom says that it expects content licensing to grow by 10% this year, while Netflix, Inc. (NASDAQ:NFLX) thinks it’ll pay the same amount when a deal is reached.

Those are direct comparisons, as Viacom, Inc. (NASDAQ:VIAB) licenses to more than just Netflix and Netflix is thinking of just licensing some of the content and so forth. Still, it indicates that there won’t be a boost in revenue from Netflix, Inc. (NASDAQ:NFLX) unless something gives.

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