Viacom Posts Lower 1Q Earnings, Revenue

NEW YORK (AP) – Lower sales of home DVDs outweighed healthy growth in advertising revenue during Viacom Inc.’s fiscal first quarter, sending earnings down 12 percent from a year earlier for the owner of the MTV channel and Paramount Pictures movie studio.

The New York company, which is controlled by billionaire Sumner Redstone, said Thursday its net income fell to $610 million, or $1 per share, for the three months ended Dec. 31 from $694 million, or $1.14 per share, a year ago. Adjusted profit, which excludes earnings from discontinued operations, was $1.02 per share.

Revenue fell 5 percent to $3.83 billion from $4.02 billion, a drop Viacom attributed mainly to lower home entertainment sales. Higher advertising and theatrical revenue wasn’t enough to make up for the drop in DVD demand.

Analysts polled by FactSet had expecte d earnings of 98 cents a share and revenue of $4.04 billion.

Viacom said advertising revenue grew during the quarter, echoing the sentiment of media conglomerates News Corp. and Time Warner Inc., both of which reported solid quarterly results Wednesday amid a broad advertising recovery.

Viacom’s media networks segment – its most profitable – generated $2.38 billion in revenues, a 6 percent increase from a year earlier. The company has benefited from the runaway success of the TV show “Jersey Shore,” which is gearing up for its fourth season set in Italy. The show has nearly 9 million viewers and has helped drive a revival for MTV.

“MTV is back on the moment. Its programming is attracting bigger, broader audiences than ever before and it is driving the cultural conversation,” said CEO Philippe Dauman in a conference call with analysts. “Last quarter MTV had three of the top five original cable series with ‘Jersey Shore,”Teen Mom,’ and ’16 and Pregnant.'”

At the same time, home entertainment sales, namely DVDs, fell from year-ago results that were boosted by big releases such as “Transformers: Revenge of the Fallen” and “Star Trek.”

Paramount Pictures saw theatrical revenue grow sharply, to $416 million thanks to seven films, including “True Grit” and “The Fighter.” In the year-ago quarter, Paramount had just four releases and pulled in $93 million in theatrical revenue.

Television license fees were down 38 percent to $274 million, due to fewer available titles. In addition to MTV, Viacom operates cable channels BET, Comedy Central and Nickelodeon. The company has benefited from the ongoing recovery in advertising, and in the latest quarter saw domestic ad revenue grow 10 percent. Worldwide ad revenue was up 7 percent, Viacom said. Citi Investment Research analyst Jason Bazinet said this implies that international ad revenue declined.

On Wednesday, Time Warner, which owns HBO, Warner Bros. and CNN, reported a 22 percent earnings increase, with revenue and adjusted profit handily surpassing analyst expectations. News Corp., the owner of Fox News, 20th Century Fox movie studio and The Wall Street Journal, more than doubled its net income and while revenue grew less than 1 percent, it beat Wall Street’s expectations.

Viacom’s results come in the heels of a new deal between the company and Hulu that brings back “The Daily Show with Jon Stewart” and “The Colbert Report” to the online video service. The two Comedy Central shows have been absent from Hulu for nearly a year and return along with the debut of new episodes of shows such as “Jersey Shore” and “Teen Mom 2,” which will be available 21 days after they air on TV. Only subscribers of the $8-a-month Hulu Plus service will be able to watch the shows.

Viacom’s Class B shares fell 61 cents, or 1.4 percent, to $43.36 in afternoon trading.