Viacom Quarterly Earnings Drop, But Beat Expectations
Viacom on Thursday reported lower fiscal first-quarter earnings amid weaker results in its TV networks unit and its film division, which posted a widened loss. But the company's overall profit slightly exceeded Wall Street expectations.
Lower film unit results, driven by a weak slate, and a decline in TV advertising revenue was only partially offset by increased TV affiliate fee revenue.
The entertainment conglomerate, led by CEO Philippe Dauman, posted earnings from continuing operations of $473 million, down 20 percent from the $591 million recorded in the year-ago period. Earnings per share fell 12 percent to 93 cents. Adjusted earnings of 91 cents per share exceeded Wall Street estimates by a penny.
Revenue fell 16 percent to $3.31 billion driven by a 37 percent decline in the film business and a 2 percent drop in the media networks unit. The revenue fell short of forecasts.
Film unit losses widened from $31 million to $139 million, while media networks profit fell 9 percent to $1.03 billion.
The company's TV networks unit has been affected by weaker ratings and therefore lower advertising revenue, even though ratings momentum improved in the latest quarter. U.S. and worldwide advertising revenue each decreased 6 percent. U.S. affiliate fee revenue rose 4 percent, but excluding a Netflix licensing pact that boosted the year-ago period, affiliate revenue would have grown in the low-double digit range.
The film unit was hurt by the disappointing performance of DreamWorks Animation's Rise of the Guardians, which Viacom's Paramount distributed. Theatrical revenue fell 42 percent as the company also cited a difficult comparison with the prior-year release of Mission: Impossible - Ghost Protocol. Home entertainment revenue declined 43 percent amid fewer releases, and TV license fee revenue dropped 24 percent.
"Our ongoing investments in programming continue to produce results, with positive ratings trends and growing consumer engagement in new hit content, despite difficult short-term comparisons based on the mix of film releases and the lingering effect of ratings softness last year," Dauman said. "Paramount is well positioned for the future, with several upcoming tentpole releases, including G.I. Joe: Retaliation, Pain & Gain, Star Trek Into Darkness and World War Z."
Said Sumner Redstone, executive chairman and controlling shareholder: " I am fully confident that by investing in new hits we will continue to build our outstanding brands and deliver strong value to shareholders."