Entertainment conglomerate Viacom on Friday reported improved financials for its fiscal third quarter as its U.S. TV advertising revenue growth accelerated.
The company, led by CEO Philippe Dauman, reported adjusted earnings from continuing operations of $635 million, up 20.4 percent from $512 million in the year-ago period. That was roughly in line with analysts’ estimates.
Revenue rose 14 percent to $3.69 billion from $3.24 billion in the year-ago period, exceeding Wall Street expectations.
Analysts had on average forecast earnings of $636 million on revenue of $3.58 billion.
Viacom also announced Friday that its board has approved an expansion of its stock repurchase program to $20 billion from $10 billion. Media mogul and chairman Sumner Redstone controls Viacom and CBS Corp.
Media networks unit revenue rose 13 percent, while film revenue jumped 15 percent, helped by such releases as World War Z, Star Trek Into Darkness and Pain and Gain. However, worldwide home entertainment revenue declined 10 percent, with the company citing lower carryover revenue.
“World War Z opened on June 21, so the quarter contained most of the P&A expense, but only about one week of the box office,” said Evercore Partners analyst Alan Gould before the earnings report. “The September quarter should show an extraordinarily high film margin, because there will be little if any P&A costs during the quarter, as no new films are currently scheduled to be released during that period.”
Viacom said operating profit in its fiscal third quarter rose 24 percent in the media networks unit to $1.16 billion, but declined 63 percent in the film division to $17 million as the company cited higher operating expenses.
Media networks revenue rose thanks to increases in affiliate fees and advertising revenue at the unit that houses the company’s cable channels, including MTV, BET, Nickelodeon and Comedy Central. Affiliate revenue rose 26 percent worldwide and 28 percent in the U.S. due to the benefit of digital distribution arrangements and rate increases. Excluding the impact of digital distribution arrangements, which are affected by the timing of available content, the domestic affiliate revenue growth rate was in the high single digit percentage range.
U.S. advertising revenue rose 6 percent, up from 2 percent in the previous quarter “due in part to increased ratings.” Worldwide advertising revenue rose 5 percent.
“Viacom’s strong results in the quarter once again demonstrated the value of our world-leading brands, global reach and devoted audiences,” said Redstone. “With an improving economy, Viacom is poised for continued success.”
Said Dauman: “Viacom’s aggressive investment in content, outstanding operational execution and fiscal discipline helped deliver a strong quarter with double-digit revenue and profit growth. Domestic advertising revenue gains continued to accelerate at our media networks as new, original programming drives improving ratings momentum.”
Added the CEO: “In a crowded summer season, Paramount’s tentpoles – Star Trek Into Darkness and World War Z – achieved critical and box office success, and the studio has a promising slate remaining through calendar 2013 and beyond.”