Viacom profits rise 37%; end to DreamWorks Animation deal seen


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Viacom delivered 37% higher profit in its third quarter, largely driven by a bounty of revenue at its profitable cable channels including MTV, Comedy Central and Nickelodeon.

For the quarter ended June 30, revenue was up 15% to $3.8 billion. The New York media company, controlled by billionaire Sumner Redstone, generated $574 million in net income, or 97 cents per share, compared to $420 million, or 69 cents a share, in the year-earlier period.


Viacom Chief Executive Philippe Dauman said the company’s stepped-up investment in original programming was making a difference. He also indicated that Los Angeles-based Paramount Pictures was working under the assumption that it would lose its profitable distribution arrangement with DreamWorks Animation -- a topic that piqued the interest of analysts.

‘There has been what I consider to be a surprising amount of attention to this issue,’ Dauman said, noting that Paramount itself was no slacker at the box office with six movies in a row that have surpassed $100 million in gross receipts. Of course, that list includes DreamWorks Animation’s popular ‘Kung Fu Panda 2.’

Paramount announced last month that it would be forming its own animation studio with the goal of releasing one computer-generated movie a year, beginning in 2014.

‘We are proceeding on the operating assumption that we will not be extending the DreamWorks Animation deal beyond next year,’ Dauman said. ‘Paramount will do just fine under any scenario.’

When pressed by a second analyst about the seemingly tense state of negotiations between Paramount chief Brad Grey and DreamWorks Animation Chief Executive Jeffrey Katzenberg to extend the relationship, Dauman did not exactly put that speculation to rest.

‘Let me stress that Jeffrey and I have a very good and strong relationship, and a deep relationship between our companies. It’s not just a Paramount relationship -- It’s a Viacom relationship.... We have done a great job in marketing DreamWorks Animation films.... The only issue is what DreamWorks Animation wants to do strategically, and how that fits into our own strategy.’


Viacom now considers the April-through-June quarter its third quarter. Viacom’s media networks unit raked in $2.39 billion in revenue -- a 16% increase from the previous-year period. Viacom attributed the increase to higher advertising and licensing fees. Advertising revenue was up 14% worldwide to $1.28 billion for the quarter. Domestically, ad revenue jumped 12%. Affiliate fees increased 19% to $971 million as the company began to capture dollars from digital distribution deals. It also collected higher fees from traditional distribution partners.

Despite lower theatrical earnings, the Paramount filmed entertainment unit saw its revenue climb 13% to $1.41 billion. The company said the growth came through higher television license fees and DVD sales and rentals. Home entertainment revenue was up 33% to $331 million, in part because of the inclusion of an additional release when compared to its slate of offerings during the year-ago period.

Meanwhile, Paramount’s theatrical revenue was down 9% to $588 million.

The company expects the current quarter to be stronger because the third installment of ‘Transformers’ was released at the end of June. The bulk of the profits from that hit movie will be recorded in the July-September quarter.

-- Meg James


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