What's going on?

Viacom, the big media company that owns TV channels such as MTV, reported its financial results on Thursday, but the company�s performance is being overshadowed by a fight involving its 93-year old controlling shareholder and the company�s board�

What does this mean?

Viacom had pre-warned investors back in June that these results would fall short of expectations � so the stock didn�t react much.

Investors� focus is more on the ongoing lawsuit between Viacom�s CEO and its controlling shareholder, Sumner Redstone. Viacom�s CEO has worked for Redstone for almost thirty years, but in June Redstone fired him (and others on the board). There is an ongoing court case concerning the dismissal and the mental capacity of Redstone – a decision should come sometime this autumn. Meanwhile, Viacom�s performance has been dismal: its stock is down more than 20% in the past year. The lawsuit has paralyzed the leadership of the company at a time when traditional media firms are facing a particularly challenging environment.

Why should I care?

For the stock: Many Viacom investors would like to see it re-merge with CBS.
It wasn�t long ago (2005) that the two were part of the same company. Since then, CBS has done very well by, among others things, producing more popular content, while Viacom has languished along with demand for cable channels like MTV. Viacom would probably benefit from the scale that would come from being under CBS�s umbrella, but it�s far from clear that CBS would welcome the struggling company.

The bigger picture: �Original content� isn�t so original as a media company�s strategy.
Viacom is increasing its spending on original content in an effort to boost future revenue. But, virtually every media company is planning to invest more in making better content – from Netflix to CBS and, even, Amazon. That�s great news for those watching TV but whether there are enough viewers to justify all that spending is a big question for the industry.