Q3 isn't good for Viacom

Company's income fell 37%

A deteriorating television advertising market and movies that couldn't compete with last year's "Transformers" juggernaut caused Viacom on Monday to post third-quarter net income that fell 37%.

Last year also benefited from a $192 million gain from the sale of publishing company Famous Music.

Overall, Viacom earned $401 million in the quarter on revenue that grew 4% to $3.4 billion.

Revenue at Viacom's media networks business rose 6% to $2.13 billion even as ad sales declined 2% worldwide. Cable and satellite fees were up 12%.

One especially bright spot during the most recent quarter was the video game "Rock Band."

Ancillary revenue at the media networks business shot up 36% to $313 million driven by "Rock Band." Viacom CEO Philippe Dauman said 7 million units of the game have shipped and 26 million songs have been downloaded.

At filmed entertainment, revenue inched up $4 million to $1.31 billion on the strength of home video. Dauman said "Iron Man" is the biggest-selling Blu-ray Disc of all time.

Television license fees also helped filmed entertainment post rising revenue even as theatrical revenue plunged 36% to $312 million.

Falling ratings at MTV also are a concern, and Dauman said he would address the problem with more original programming with additional interactive elements.

He also promised niche programming blocks that might make it easier to target a specific audience with certain types of advertising.

Nick at Nite earned praise for comparing favorably to the juggernaut known as Disney Channel.

Dauman also seemed especially pleased with the Nickelodeon show "iCarly" and said next year's 10th anniversary of "SpongeBob SquarePants" promises to be a marketing and profit-making event.

He also said MTV's "The Hills" and Comedy Central's "The Colbert Report" and "The Daily Show With Jon Stewart" are attracting record numbers of viewers.

As for falling ad sales, the industries singled out were auto, video games, beverages and films.

Also on Monday's conference call with analysts was executive chairman Sumner Redstone, who confirmed that Viacom is "the love of my life" and that his National Amusements holding company doesn't intend on selling more shares of Viacom or CBS.

National Amusements sold $233 million worth of CBS and Viacom nonvoting shares in order to service debt, and rumors have floated that more sales could be forthcoming.

But National Amusements "does not intend to sell one more share" of CBS or Viacom, Redstone said Monday.

Addressing the global economy, Redstone also said that Viacom, as a company focused on content, is positioned well to outperform -- relatively speaking -- others in "a time of uncertainty here and abroad."
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