Viacom Quarterly Profit Drops, Film Unit Profit Rises
Viacom, led by CEO Philippe Dauman, on Wednesday reported lower fiscal third-quarter earnings, but higher earnings per share amid continued stock buybacks.
Net earnings of $610 million were down from $643 million, while operating profit was virtually unchanged.
Revenue dropped 7 percent driven by a big drop at the film unit, but higher media networks revenue. TV advertising sales were up slightly amid industry-wide softness.
The earnings and revenue figures came in slightly below Wall Street expectations.
Film revenue fell 26 percent as Transformers: Age of Extinction opened in the U.S. only late in the quarter, with most revenue to be recognized in the following weeks and months. The year-ago period had benefited from a Star Trek movie and World War Z.
Media networks profitability was down over the year-ago period, which had been boosted by a big Amazon digital licensing deal. But revenue rose 1 percent as advertising rose 1 percent in the U.S. and 2 percent worldwide.
Film operating profit was up strongly, from $17 million to $55 million, though due to timing issues. The company cited lower film and distribution expenses. Film revenue dropped though amid a 43 percent decline in theatrical revenue due to the number and timing of releases. "Worldwide home entertainment revenues decreased 24 percent, impacted by a decline in revenue from carryover and current quarter titles," the company said.
“It was a solid quarter for Viacom," Dauman said in a statement. "We delivered nearly $1 billion to shareholders through buybacks and dividends and continued to build on our success in creating outstanding content and focused brands that connect deeply with audiences across all platforms."
On the earnings conference call, Dauman lauded the Paramount Channel in Spain for drawing strong viewership and the success of MTV Italy since the company acquired full control last year.
He also touted the success of the latest Transformers film, highlighting that it is the highest-grossing film of the year in the U.S. and the highest-ever grossing film ever in China. He called that a "crowning achievement" for the movie, which has had a strong international run.
Dauman on Wednesday also said that Hercules has had a "solid" start and that the upcoming Teenage Mutant Ninja Turtles will be "another milestone in our revitalization of the franchise" since Viacom acquired it in a 2009 deal.
He concluded: "Paramount is poised for an outstanding summer."
The CEO on the call also cited general ad weakness and softer ratings at some Viacom networks as the reasons behind the weak ad revenue performance in the latest quarter. He said though that the company sees a continuing improvement in the economy and expects the scatter ad market to strengthen later in the year.
Viacom chairman Sumner Redstone kicked off the conference call saying that "Viacom continues to build its leading brands." In a press release, he had also said: "As the industry landscape continues to evolve, our business is very well positioned.”
As always, Redstone handed over to Dauman on the call by praising him. He called him "my great, great friend, the wisest man I have ever known."