Viacom profit soars 53% on Paramount Pictures revenue
Paramount Pictures proved that it was no slouch — and certainly no revenue reptile — helping to propel its parent company to higher-than-expected profit in its fiscal second quarter.
Viacom Inc. reported Thursday that its latest quarterly earnings soared 53%. The media company’s popular cable channels, including MTV and Nickelodeon, continued to be revenue engines. The big surprise was Paramount, which sometimes has been an earnings laggard. The Melrose Avenue studio generated 38% higher revenue, fueled in large part by the performance of its animated reptile picture “Rango” and teen heartthrob movie “Justin Bieber: Never Say Never.”
For the period ended March 31, Paramount raked in $1.2 billion in revenue compared with $886 million in the year-earlier period. The studio posted an operating profit of $39 million for the quarter, compared with an $83-million loss the previous year.
“Paramount Pictures delivered strong results across the board,” Philippe Dauman, Viacom chief executive, told analysts Thursday during a conference call.
For example, worldwide box office revenue was up 50% to $401 million. Paramount’s home-entertainment division posted a 38% increase in revenue to $410 million. During the quarter, the studio had nine DVD releases, including “Megamind,” “Paranormal Activity 2” and “The Fighter,” compared with just one new DVD title in the same period a year earlier. Paramount also collected $336 million in TV license fees, an increase of 30%.
Wall Street analysts have long been troubled over Paramount’s high overhead costs. Thursday, Viacom executives pledged to continue to improve efficiencies. Filmed entertainment continues to be the company’s lowest-margin business. Paramount has thrived in part because of its distribution partnerships with Marvel Entertainment and DreamWorks Animation. However, the studio now is tasked with coming up with its own big event movies following the departure of Marvel, which was acquired in 2009 by Walt Disney Co., and its other former key supplier, DreamWorks live action studio.
“We are looking to benefit from our own franchises,” Dauman said.
Overall, Viacom’s net earnings from continuing operations climbed to $376 million, or 63 cents a share, compared with $245 million a year earlier. Revenue increased 20% to $3.27 billion.
Cable television networks, including MTV, Nickelodeon and BET, continue to be the financial heart of the New York-based company. Second-quarter TV revenue of $2 billion was up 11%, and its operating income of $806 million represented an increase of 13%.
Advertising at the cable networks jumped 12% for the quarter. The company has taken advantage of its broadcast-sized ratings for several of its shows, including MTV’s “Jersey Shore” and Nickelodeon’s “iCarly” special. BET delivered its best ratings quarter ever, and MTV soon will dispatch Snooki and “the Situation” to Europe for an Italian installment of “Jersey Shore.”
“Every part of Viacom is in great shape,” said Dauman, who received $84.5 million in stock, salary and other benefits in 2010. Of that, $30 million was a stock award, the value of which could change before it vests.
