Investors couldn't be less interested in shares of Viacom (NASDAQ:VIAB) stock, which is down meaningfully versus the S&P 500 so far this year despite impressive gains in earnings per share:

VIAB Chart

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Cutting the cable cord
Last month's earnings report probably didn't help. Revenue and profit came in lower than expected as Media Networks -- the division responsible for MTV, Nickelodeon, and related cable assets -- struggled to sell space at the annual "upfront" meetings with key advertisers.

"At the beginning of the quarter, we were looking to mid-single digit [advertising] growth and ended up at 1%. I would say about half of the difference related to soft demand ... and half were some ratings issues at individual networks," Viacom chief executive Philippe Dauman said during a call with analysts.

How big was the fallout from the failed upfronts?  Big enough. Cash from operations fell 25.6% year over year. Net income fell 5.1% over the same period.

To be fair, Viacom wasn't the only network to have trouble closing ad deals. Disney (NYSE:DIS) and Twenty-First Century Fox (NASDAQ:FOXA) also faced pushback from reticent buyers. If Viacom took a bigger hit, it's because Media Networks accounts for over 70% of company revenue and nearly all of its operating income. (Source: S&P Capital IQ.)

3 reasons it's still too soon to buy Viacom stock
Viacom needs its programming to hit with viewers in order to boost ad volume and margin. That won't be easy. Here are three reasons for investors to keep to the sidelines as Dauman and his team work out the kinks in Viacom's strategy.

1. TV viewers have more choices than ever. Every on-demand network now features some original programming. The result? Intensifying competition for viewers. Consider Netflix's House of Cards, which scores 9.1 out of 10 at IMDb from a combined 146,099 users. By comparison, Teen Wolf, one of MTV's most popular shows, nets 7.8 out of 10 from 55,787 users, while the hit CBS comedy The Big Bang Theory gets an 8.6 out of 10 from 384,141 users. Netflix's top program seems to be drawing the viewership you'd expect of a top cable show.

2. Buybacks could end up wasting precious capital. Dauman sees a big bet on Viacom stock as a boon to shareholders. All told, the board has authorized he and his team to repurchase as much as $850 million in stock before the quarter ends in a few days. Last quarter, Viacom repurchased shares at an unfortunate premium -- $85 apiece, on average.

3. Franchise fatigue is still a real possibility. Paramount Pictures accounts for about 30% of Viacom's revenue but only a sliver of its operating profit. New franchises could alter the equation, yet few are in development. Teenage Mutant Ninja Turtles is the exception, but even that's a born-again property. Other films in Paramount's pipeline include a third Star Trek movie, a Friday the 13th reboot, Mission Impossible 5, and new additions to the Terminator franchise. Fatigue is a real possibility, especially if Christopher Nolan's promising-looking Interstellar -- which Paramount is distributing -- ends up as a one-shot.

Viacom stock may be stuck in neutral for a while
So what's the good news? At 14.3 times trailing earnings and 13.2 times estimates tracked by S&P Capital IQ, Viacom stock trades for a meaningful discount to its peers. Investors holding for many years could reap the rewards of patience.

In the meantime, there are plenty of forces conspiring to keep a lid on Viacom stock. From tough competition to poor timing to a lack of ideas, all of it could hurt investor returns in the short run.

Interstellar heads to U.S. theaters on November 7. Credit: Warner Bros. via YouTube

Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple, Google (A and C class), Netflix, and Walt Disney at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

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