Paramount's thin film slate puts drag on Viacom profit

Paramount's thin film slate puts drag on Viacom profit
Can Paramount's "Teenage Mutant Ninja Turtles" give Viacom a boost? (Industrial Light & Magic / Paramount Pictures)

Viacom is hoping some muscular turtles can stomp out the doldrums at its Paramount Pictures movie studio.

Paramount this week releases the "Teenage Mutant Ninja Turtles" movie, which comes on the heels of the studio's summer blockbuster, "Transformers: Age of Extinction."

However, the two films did not arrive in theaters in time to boost parent company Viacom's lackluster fiscal-third-quarter earnings.

The media company's profit dropped 5.1% to $611 million during the April-through-June quarter. Cost-cutting helped: Earnings of $1.40 a share compared with $1.31 a share in the previous year period.

Viacom revenue fell 7% to $3.42 billion for the quarter.

The company, controlled by Sumner Redstone, missed Wall Street's earnings estimates.

Viacom's all-important cable TV networks, including MTV and BET, have been grappling with droopy ratings. Softer-than-expected advertising sales were not enough to help Viacom's bottom line.

Media networks generated revenue of $2.6 billion during the quarter, an increase of 1%. Operating income for the TV networks slipped 3% to $1.1 billion. Television ad revenue, while up 1% domestically, was weaker than analysts had been expecting.

But the real stinker was Paramount.

The Los Angeles-based movie studio simply has too thin of a film slate to be a reliable profit engine for the media company.

Paramount generated $856 million in revenue, a 26% decline from the year-earlier period. Box-office revenue plummeted 43% to $264 million. Home entertainment revenue tumbled 24% to $209 million.

The current quarter should see an improved picture for Paramount. The studio released "Transformers" at the end of June, and thus, it had to record the marketing expenses in the April-June quarter. However, most of the film's profits arrived later.

"The big miss came from the less important film segment, while [TV] networks was actually ahead of consensus, but below our estimate due to softer domestic advertising," Wells Fargo Securities media analyst Marci Ryvicker said in a research note Wednesday.

Still, Viacom's management was upbeat.

"We see a lot of opportunity at Viacom," Chief Executive Philippe Dauman told analysts on a conference call Wednesday morning. "We believe we create a lot of value to shareholders by returning capital to them."

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