Viacom Inc. — the owner of MTV, Comedy Central and Nickelodeon — disappointed investors Thursday with its quarterly earnings and its outlook for the coming months. It’s struggling to improve its fortunes as cable TV channels have become less popular.

Wall Street was particularly concerned that Viacom gave worse-than-expected guidance for early 2018. The company said affiliate fees would be lower than initially thought. Viacom has had to reduce its rates while negotiating with pay-TV distributors.

The rates will stabilize as the year progresses and then improve in 2019, Viacom’s top executives said.

Investors weren’t appeased. They pounded Viacom shares after the news, driving them down more than 7%, but the shares recovered somewhat as the day went on. They ended at $23.69, down 3.7%.


“We just don’t think the market will give Viacom credit for fiscal ’19 at this point,” Marci Ryvicker, media analyst with Wells Fargo Securities, said in a research report.

Viacom said its revenue increased 3% to $3.3 billion in its fiscal fourth quarter, beating analysts’ expectations. However, domestic TV advertising revenue was flat and affiliate fees from satellite and cable TV operators declined 3%, falling short of expectations.

For the quarter that ended Sept. 30, Viacom produced net earnings from continuing operations of $674 million, or $1.67 a share, up from $254 million, or 64 cents, a year earlier.

The New York media company reported adjusted earnings a share of 77 cents, which fell well short of analysts’ expectations of 86 cents.


“Viacom beat revenue estimates, but missed on profit,” Bernstein & Co. media analyst Todd Juenger wrote Thursday in a note to investors.

Viacom’s stock has slumped all year due to worries over whether pay-TV operators would continue to pay premiums to carry Viacom’s television channels. Its shares are down more than 30% since January.

The company, however, was able to strike a hard-fought distribution deal with cable giant Charter Communications in the quarter, keeping its largest channels in the most popular packages.

“We continue to be overwhelmingly carried on basic tiers,” Viacom Chief Executive Bob Bakish told analysts Thursday during the company’s earnings call. “No question, the industry is changing, but we see so much opportunity in these changes.”


Viacom’s Paramount Pictures, meanwhile, posted an adjusted operating loss of $43 million. The results were dragged down by a $59-million expense due to the termination of an anticipated slate film financing deal with the Chinese firm Huahua Media.

Paramount had been banking on that deal to provide a quarter of the financing for its film slate over three years, but the studio’s new leadership cobbled together several smaller partnerships to pick up the slack.

In a bright spot, revenue at the Melrose Avenue movie studio increased 2% to $789 million on higher licensing revenue from its television operations and film licensing. However, the studio saw a 43% decline in theatrical revenue to $115 million due to its weak film slate that included the disappointing “Mother!” from Darren Aronofsky.

Domestic ticket sales were down 75%; international sales slumped 12%. Paramount ranks seventh at the box office, trailing the other major film studios, and claims just 5% of the market, according to Box Office Mojo.


Paramount’s loss was significantly smaller than in the year-earlier quarter.

At Viacom’s cable television unit, revenue increased 3% to $2.55 billion due to higher advertising revenue. International revenue was up 24% to $593 million with the purchase of a South American operation, while domestic revenue slipped 2% to $1.96 billion.

Advertising revenue was up 6% to $1.22 billion. Domestic advertising was flat at $936 million.

Affiliate fees declined 1% to $1.15 billion.


“2017 was about the stabilization of Viacom,” Bakish said, adding that the company has its major distribution deals in place and won’t have to wrangle with pay-TV operators again until 2019.

meg.james@latimes.com

@MegJamesLAT

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3:45 p.m.: This article was updated with information about Viacom’s guidance and stock movement and with comment from analyst Marci Ryvicker.

This article was originally published at 7:15 a.m.