Viacom makes gains, despite increased programme costs

Viacom reported a year-on-year increase in revenue and earnings for its fiscal fourth quarter, but the company’s media networks division was impacted by increased programming expenses.

Bob Bakish

Viacom said that revenues at media networks – the unit that includes brands like MTV, Nickelodeon and Comedy Central – were up 3% overall to US$2.55 billion, driven by international gains and growth in advertising revenues.

Media networks ad revenues were flat in the US at US$936 million but up 36% to US$288 million internationally – driven by Viacom’s acquisition of Telefe as well as growth in Europe.

Domestic affiliate revenues for this division were down 3% to US$948 million, but up 12% internationally to US$200 million. Viacom attributed the US drop to a decline in subscribers and lower revenue from SVOD, which was partially offset by rate increases.

Ancillary revenues improved 5% overall to US$181 million with a 12% drop in domestic ancillary revenues counteracted by a 21% gain internationally.

“Adjusted operating income for Media Networks declined 8% to US$693 million, primarily reflecting increases in programming expenses,” said Viacom in its earnings announcement.

For the full year, Viacom said that Viacom International Media Networks continued to deliver strong top-line growth, driven by the strong performances of Paramount Channel, Comedy Central, Nickelodeon and Channel 5.

In the US the company said that MTV achieved its first double-digit ratings increase in more than six years, driven by primetime viewership of new shows like Siesta Key.

“In the fourth quarter and full year, we made strong progress against our plan to fundamentally stabilise and revitalise Viacom, with top line gains in both media networks and filmed entertainment segments driven by continued execution on our strategic priorities,” said president and CEO Bob Bakish.

“We saw significant ratings increases across the portfolio, which drove sequential improvement in domestic advertising; our international business continues to expand, delivering double-digit revenue increases; and Paramount is demonstrating growth across multiple revenue streams as it rebuilds the theatrical slate and continues to grow its TV production business.

“Additionally, we have completed several multi-year renewals of major distribution contracts – including our recent agreement with Charter – which secure broad, long-term carriage of Viacom’s networks for subscribers and expand our relationships with distributors through new, forward-looking advanced advertising and content production partnerships.”

Overall for the three months ended September 30, Viacom reported revenues of US$3.32 billion, up 3% year-on-year. Operating income and net earnings from continuing operations were both also up at US$705 million and US$674 million respectively.

Viacom beat analyst predictions for revenue but missed on earnings, according to Reuters stats. The company’s shareprice closed down 3.7% yesterday, but recovered much of this in after hours trading.