What's going on?

Viacom is the media conglomerate that owns TV channels such as MTV and Comedy Central as well as movie studio Paramount Pictures. On Tuesday, it reported 4th quarter profits that declined significantly versus the same period a year ago � and the stock got smoked by almost 20%!

What does this mean?

Viacom suffered from reduced advertising revenue and also made less money on its movie business. Part of the problem was�the strong US dollar, which meant that its profits overseas (e.g. licensing its shows to overseas stations) were worth less when translated back to US dollars. Another part of the problem was that fewer people are paying for its TV channels and to see its movies. Viacom also faces some investor concern over the health of Sumner Redstone, the media tycoon who still controls the majority of the voting stock of Viacom, and the rationale for recently appointing his right-hand man as its chairman.

Why should I care?

Bigger picture: Streaming services offer traditional media companies some opportunity – and lots of risk. For one, Netflix pays old media companies for content. But Netflix and others also threaten traditional players as they take viewers away from channels like MTV, Comedy Central and others. And the advantages they have built with their young customer base and with their �mobile� streaming capability (e.g. watching TV on your iPad as you travel) remain a threat to traditional media companies that fail to adapt.

For the market: Viacom stock has been a terrible investment recently. Its stock is down over 50% in the past year as investors question its strategy of serving its relatively young demographic with traditional TV channels (like MTV). Netflix has had a rough start to 2016, but it�s still up over 30% in the past 12 months.