Viacom surprises Wall Street with higher earnings
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Viacom Inc.’s cost-cutting measures, along with stronger results from its Paramount Pictures film unit, paid off in the third quarter as the media company posted a 15% jump in profit despite lower advertising and home video sales.
For the quarter ended Sept. 30, net earnings for the New York-based cable television and film company were $463 million, compared to $401 million for the same period in 2008. The company also benefited from higher fees paid by cable operators to carry its programming.
Overall, however, Viacom revenue declined 3% to $3.3 billion for the quarter because of lower sales of advertising on its cable networks and movie DVDs.
The company’s earnings per share, excluding a gain for some favorable tax issues and a charge for restructuring its debt, came to 69 cents a share. Analysts were impressed because they had been expecting Viacom to earn about 57 cents a share.
Viacom Chief Executive Philippe Dauman was particularly pleased with the results from Paramount Pictures, which delivered a profit for the quarter.
The studio lost $19 million in the year-ago period, and in recent conference calls, analysts had expressed concerns about Viacom executives’ ability to make money at the studio. This morning, Dauman trumpeted Paramount’s ‘more disciplined approach’ in the deals that it negotiates with movie producers, writers and actors, which allow the studio to lower its expenses.
The movie studio produced operating income of $69 million for the quarter. Revenue for the filmed entertainment unit came in at $1.2 billion, down 6% from the third quarter of 2008.
The company’s juggernaut media networks division, which includes the MTV networks, Nickelodeon, BET and Comedy Central, contributed operating income of $773 million, a 2% increase over the third quarter of 2008. Revenue for media networks was flat at $2.1 billion.
So far, sales of the company’s ‘Rock Band’ video game have exceeded some expectations on Wall Street. Dauman said the company was hopeful but cautious about sales for the current quarter as the industry heads into an uncertain holiday retail season.
-- Meg James
