Viacom Quarterly Earnings Rise, Revenue Drops

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UPDATED: The entertainment conglomerate, led by CEO Philippe Dauman, posted advertising and film revenue declines for its fiscal fourth quarter.

Viacom's stock rose in early Thursday trading after the company reported higher fiscal fourth-quarter earnings that exceeded Wall Street estimates despite a big revenue drop.

As of 10:20am ET, the stock was up 3.4 percent to $49.63.

The entertainment conglomerate, led by CEO Philippe Dauman, posted quarterly adjusted earnings from continuing operations of $626 million, up 2 percent from $614 million in the year-ago period. Earnings per share rose 14 percent to $1.21, and operating profit increased 13 percent to $1.05 billion.

Revenue dropped 17 percent to $3.36 billion. Media networks unit revenue was unchanged at $2.29 billion amid increased affiliate fees offset by lower advertising and ancillary revenue. The benefit from a move of the BET Awards into the latest quarter was offset by the effect of Viacom's networks being off the air in DirecTV homes for more than a week amid a carriage dispute.

U.S. ad revenue fell 6 percent, with worldwide ad revenue down 7 percent. Digital licensing deals and carriage fee increases drove U.S. affiliate revenue up 12 percent. Film revenue dropped 39 percent due to the lower number and mix of theatrical and home entertainment releases. The unit also had difficult comparisons with the year-ago period when Transformers: Dark of the Moon contributed to results But. TV and ancillary revenue in the film segment rose by 19 percent and 21 percent, respectively.

Operating profit in the media networks division dropped 3 percent in the latest quarter, while film operating profit rose 5 percent amid higher TV and digital revenue, which has a higher profit margin, and cost savings.

Wall Street had on average forecast $603 million in earnings on revenue of $3.4 billion for Viacom as a whole.

Revenue for the full fiscal year came in at $13.89 billion, down 7 percent as higher media networks revenue was more than offset by lower film revenue. Full-year adjusted earnings from continuing operations rose 1 percent to $2.26 billion though.

Media networks unit operating profit edged up 1 percent for the year, while the film unit recorded a 5 percent decline from the previous fiscal year, which had benefited from a one-time benefit from the sale of certain distribution rights for Marvel films.

“Viacom continues to create many of the world’s best known and most exciting media properties, and delights audiences across the globe with content for every screen imaginable," Viacom executive chairman Sumner Redstone said. " Our unparalleled creative minds and Philippe’s outstanding management position Viacom perfectly for long-term growth.”

“Viacom is executing on its goals of continued investment in great content, ongoing operational excellence and ever-increasing returns to shareholders," said Dauman. "Paramount also continued to achieve solid margin growth in the fourth quarter and full year, and has an exciting pipeline in place with eight films in the [current] first fiscal quarter, including Jack Reacher, DreamWorks Animation’s Rise of the Guardians and the recently released Flight."

On an earnings conference call, Dauman said that ad pricing is up in the mid-teen percentage range over upfront ad sales this quarter.
And executives said the early part of the fiscal year will see weaker film profits due to tough home entertainment comparisons, with profitability getting stronger in the back half of the year.

Twitter: @georgszalai