Viacom Quarterly Earnings Decline, Ad Revenue Rises
Viacom on Wednesday reported lower earnings for its fiscal second quarter, but the company's cable networks unit returned to advertising growth after a period of quarterly declines.
The entertainment company, led by CEO Philippe Dauman, said its adjusted profit from continuing operations of $481 million was down from $535 million in the same period a year earlier. Wall Street had on average expected earnings of $475 million, with cost control measures helping the company exceed projections.
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Revenue came in at $3.14 billion, down 6 percent from the $3.33 billion recorded in the same quarter last year. Analysts had looked for $3.19 billion in revenue. The decline was driven by a film unit revenue drop of 20 percent amid a 38 percent decrease in home entertainment revenue due to the number and mix of releases.
Theatrical revenue was down 15 percent amid lower carryover revenue compared to that from Mission Impossible: Ghost Protocol in the year-ago period. Revenue from the quarter's theatrical releases, Hansel and Gretel: Witch Hunters and G.I. Joe: Retaliation, was higher than that from year-ago titles, Viacom said.
Media networks revenue rose 2 percent due to an increase in advertising, affiliate and ancillary revenue. U.S. and worldwide advertising revenue
each rose 2 percent. "Viacom’s media networks are continuing to develop innovative new original programming for all of our audiences and building unique experiences for our established brands that move beyond the television screen," said Dauman. "As a result, ratings are up at several networks, and advertising revenues have returned to year-over-year growth."
He added that the Paramount film studio is also "executing on its strategic plan" and looking for success with key upcoming releases. "The year ahead remains strong, with audiences eagerly awaiting our upcoming tentpole releases - Star Trek Into Darkness and World War Z."
"Viacom looks interesting versus low expectations," Lazard Capital Markets analyst Barton Crockett had said ahead of the earnings report. "Viacom has been written off by many as a secular audience loser. But Nickelodeon is stabilizing after a tough year, and we believe ad revenues are too, with the domestic cable ads likely to be close to flat [in the latest quarter] and turn positive in later quarters."
Executive chairman Sumner Redstone is Viacom's controlling shareholder.