Viacom Inc.'s fiscal third-quarter profit soared 20%, boosted by ratings improvement at the company's TV networks and two gigantic films from Paramount Pictures: "Star Trek Into Darkness" and "World War Z" with Brad Pitt.
Viacom became the latest entertainment company this week to exceed Wall Street's earnings expectations, underscoring the value of high-quality content. Viacom's Melrose Avenue film studio, Paramount Pictures, performed well despite higher costs and declines in home entertainment sales.
For the quarter ended June 30, Viacom earned $643 million, or $1.31 a share, up from $534 million, or $1.01 a share, in the year-earlier period.
Revenue at the Sumner Redstone-controlled company increased a whopping 14% to $3.69 billion. That compared to $3.24 billion in the previous-year period.
The company reported its earnings Friday. Fiscal improvement came primarily from ratings improvement at Viacom's television networks, which include Nickelodeon, MTV, Comedy Central and BET. Domestic advertising revenue was up 6%.
"The significance of our performance goes beyond financial growth," Viacom Chief Executive Philippe Dauman told analysts on a Friday morning conference call.
Increased investment in original programming, particularly at the TV networks, was key to the company's results, Dauman said, adding, "We are investing more than ever in new content."
The TV networks generated $2.57 billion in revenue, an increase of 13% from the year-earlier period. Operating income in television was up 24% to $1.16 billion.
"Nickelodeon is clearly on the way back with new live action and animated hits," Dauman said.
Nickelodeon's new hits, including "Sanjay and Craig," and "Teenage Mutant Ninja Turtles," also have performed well. The network also shifted shows from the Nick Jr. channel to the main Nickelodeon network to improve ratings. Viacom also struck a lucrative content licensing deal with Amazon.com.
Film studio Paramount Pictures produced $1.16 billion in revenue, an increase of 15% over the year-earlier period. Operating income dropped 63% to $17 million compared to $46 million in the year-earlier period.
Theatrical revenue of $464 million was an increase of 64%. Paramount released J.J. Abrams' "Star Trek Into Darkness" in May and "World War Z" at the end of June.
"We were fortunate that we had two strong tent poles," Dauman said.
However, home entertainment revenue for the studio was down 10% to $275 million for the quarter. Paramount's TV license fee revenue of $298 million slipped 5%.
Viacom said Paramount had to book "World War Z" marketing expenses in the April-June quarter, which dampened results. However, the company benefited from the Marvel distribution rights sale to the Walt Disney Co.