Viacom Q1 profit falls 34%
U.S. ad revenue down 9%, but CEO sees stabilizationNEW YORK -- Viacom Inc. posted first-quarter earnings of $177 million Thursday, down 34% amid lower revenue at both its film and TV networks businesses.
In a conference call Thursday morning, Viacom chairman Sumner Redstone discussed the state of the auction of select U.S. and U.K. theaters of Viacom parent National Amusements, which he controls.
He cited "substantial preliminary interest" and said he is "very encouraged" by the number of interested parties and particularly the price points seen so far.
Discussing the economy, Redstone defended his management team's lack of flashiness, which has led some analysts to call for a new CEO.
While economic drama always draws a crowd, he said Viacom hopes to point with "a well-planned strategy executed with understated resolve."
Meanwhile, CEO Philippe Dauman said his team has seen signs that the ad market and the broader economy may be stabilizing and predicted a potential economic turnaround later this year. "In the last few weeks, we have seen the advertising market stabilize," he said.
Revenue at Viacom declined 7% to $2.91 billion due to foreign currency exchange impacts, as well as lower ancillary and advertising revenue. Sales of music video game "Rock Band" also weakened compared with strong initial sales in the year-ago period.
The company's networks and film units saw revenue fall 8% and 5% respectively. Operating income at the TV arm dropped 9%, while the film operating loss nearly doubled to $123 million.
U.S. TV advertising revenue fell 9%, while worldwide ad revenue slumped 11%. Dauman said in the call that the kids upfront is going "quite well."
At the film division, theatrical revenue rose 15%, home entertainment revenue declined 9% and TV licensing revenue fell 9%. "A trip to the movie theater was an increasingly popular entertainment option for consumers in the first quarter," said Dauman, touting tentpole releases in the current quarter - "Star Trek" and "Transformers: Revenge of the Fallen."
Hurting the film bottom line was a $29 million one-time payment from Toshiba in the year-ago quarter for its shuttering of the HD DVD format.
Asked about the Epix premium TV service joint venture with Lionsgate and MGM, he predicted affiliate deals will be ready closer to the fall launch. Asked by analysts about the worst case scenario if the channel didn't get any carriage, he said: "There is no worst case here."