Bloomberg News

Viacom Earnings Exceed Estimates on MTV, Nickelodeon Fees

May 03, 2012

Operating profit at the Entertainment Division that includes Paramount’s film studio almost tripled to $115 million on revenue of $1.17 billion. Photographer: Jonathan Alcorn/Bloomberg

Operating profit at the Entertainment Division that includes Paramount’s film studio almost tripled to $115 million on revenue of $1.17 billion. Photographer: Jonathan Alcorn/Bloomberg

Viacom Inc. (VIAB:US), owner of the Paramount film studio and MTV, Nickelodeon and Comedy Central cable channels, reported fiscal second-quarter earnings that exceeded analysts’ estimates on higher fees from pay-TV systems.

Excluding items, profit jumped to 98 cents a share, New York-based Viacom said today in statement. Analysts predicted 89 cents, the average of estimates compiled by Bloomberg. Sales rose 2 percent to $3.33 billion, in line with projections (VIAB:US).

Viacom’s media networks unit, which contributed 92 percent of operating (VIAB:US) profit in fiscal 2011, according to data (VIAB:US) compiled by Bloomberg, saw a 15 percent increase in domestic fees for its cable networks and 17 percent worldwide during the quarter. U.S. ad sales rose 1 percent from a year earlier following a 3 percent decline in the first quarter.

The lack of ad-sales growth was offset by rising rates for programming from pay-TV operators, which speaks to the attractiveness of the cable-network model, Brett Harriss, analyst with Gabelli & Co. in Rye, New York, said in a telephone interview after the report.

“Getting that dual source of revenue is key to their business,” he said.

Viacom, controlled by Chairman Sumner Redstone, rose 3.4 percent to $49.02 at the close in New York, the biggest gain in three months. The stock (VIAB:US) has climbed 7.9 percent this year.

‘Ratings Problems’

Viacom has chronically underperformed its peers in advertising, according to Paul Sweeney, senior analyst at Bloomberg Industries.

“They’ve had a series of ratings problems, first at MTV and now at Nickelodeon,” he said in an interview after the report.

Net income increased 56 percent to $585 million, or $1.07 a share, from $376 million, or 63 cents.

Media Networks operating profit climbed 11 percent to $893 million on $2.19 billion in sales. MTV airs “Jersey Shore,” while Comedy Central is home to “The Daily Show with Jon Stewart.”

Operating profit at the Entertainment Division, which includes Paramount’s film studio, almost tripled to $115 million on revenue of $1.17 billion. In the period, Paramount collected $227 million in U.S. box office sales led by “Mission: Impossible -- Ghost Protocol,” according to researcher Box Office Mojo.

The company said it repurchased 14.7 million shares during the quarter ended March 31, for an aggregate of $700 million. As of yesterday, Viacom had $5.9 billion remaining in its $10 billion stock buyback plan.

To contact the reporters on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net; Edmund Lee in New York at elee310@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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Companies Mentioned

  • VIAB
    (Viacom Inc)
    • $85.98 USD
    • 0.47
    • 0.55%
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