Advertising slow-down worries cloud Viacom’s 16% profit gain

‘Wolf of Wall Street’
Viacom reported 16% profit growth in its fiscal first quarter of 2014 but Paramount Pictures dragged down revenue. Paramount released “The Wolf of Wall Street,” starring Jonah Hill and Leonardo DiCaprio in the quarter.
(Mary Cybulski, Paramount Pictures)

Media company Viacom Inc. reported 16% higher profit in its fiscal first quarter but revenue dipped -- raising worries on Wall Street about a slow-down in domestic advertising sales.

But blame Paramount Pictures, the Los Angeles-based movie studio, for  Viacom’s lower revenue in the quarter ended Dec. 31.

Studio revenue plunged 30% to $681 million because of fewer movie releases compared to the year-earlier period.

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Paramount lost $74 million in the quarter, which was an improvement over the previous year period when the studio lost $139 million.

Paramount released just five films during the October-December quarter, including the heavily hyped “Anchorman 2: The Legend Continues” and Oscar contender “The Wolf of Wall Street."  That compared to eight films in the previous year period.

Movie theatrical revenue fell 52% to $159 million for the quarter. Home entertainment sales suffered a 37% decline to $216 million.

Nonetheless, Viacom -- which owns the cable TV networks as MTV, Nickelodeon, Comedy Central and BET -- beat Wall Street estimates on  strong earnings growth.


Overall, Viacom earned $547 million, or $1.20 a share, up from $470 million, or 92 cents a share in the previous year period.

Revenue was down 3.5% to $3.2 billion.

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“Viacom turned in a solid performance in the December quarter,” Viacom Chief Executive Philippe Dauman told analysts Thursday on a conference call to discuss earnings.

Analysts polled by FactSet were anticipating earnings of $1.16 a share on revenue of $3.3 billion.

Viacom’s cable television networks -- propelled by children’s channel Nickelodeon -- posted a strong quarter, but Wall Street analysts participating on the conference call seemed puzzled by an apparent hiccup in domestic advertising sales.

Ratings are up at Nickelodeon, and Comedy Central had a robust December among its core audience demographic of young adult men.  MTV, however, had some ratings deterioration.

Television revenue was up 6% to $2.5 billion.  Advertising revenue was up 4% to $1.3 billion. Fees paid by pay-TV operators for the Viacom channels increased 10% to slightly more than $1 billion.


“Domestic ad [revenue] was a bit light -- on the bright side, this was mostly offset by slightly stronger affiliate revenue,” Wells Fargo Securities media analyst Marci Ryvicker wrote in a Thursday report.

Corporate cost-cutting also helped the bottom line.

“We continue to manage our cost-base prudently,” Dauman said.


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Twitter: @MegJamesLAT

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