Viacom Tops Estimates as Pay-TV Fees, Tom Cruise Fuel Comeback
Viacom Tops Wall Street With Affiliate Fees, Tom Cruise Boost
(Bloomberg) -- Viacom Inc. reported fourth-quarter revenue and earnings that topped analysts’ estimates, driven by a Tom Cruise blockbuster and a rise in the closely watched fees paid by cable and satellite companies.
The owner of cable networks MTV and Nickelodeon earned 99 cents a share in the quarter ended Sept. 30, excluding some items, beating expectations by 4 cents. Revenue of $3.49 billion topped the $3.37 billion anticipated by analysts.
The pay-TV fees that go to the company’s networks grew 4 percent overall, and 3 percent domestically, New York-based Viacom said. Advertising revenue remained sluggish, however, declining worldwide and staying flat in North America.
Paramount Pictures gave Viacom a boost, with the Cruise franchise installment “Mission: Impossible - Fallout” as the top-grossing film of the period at the global box office. Paramount’s year-over-year adjusted operating income has now risen for seven straight quarters, Viacom said, after the division spent years as a Hollywood laggard.
Jim Gianopulos, who joined in March of last year as Paramount Pictures’ chief executive officer, is looking to accelerate the current success of Viacom’s film division with a new Netflix Inc. partnership. The deal is a multipicture film agreement announced Friday that mutes some concern about Viacom’s next phase of revenue growth as subscribers continue to ditch traditional pay-TV providers for newer platforms.
The agreement underscores the vision to expand beyond being a content supplier, Gianopulos said on a conference call, with Paramount now “exploring various new revenue streams in addition to our traditional theatrical releases as a producer of first-run films and television for other media platforms.”
Viacom said little about the slumping Nickelodeon children’s network but pointed to a coming co-production with Netflix of a live-action “Avatar: The Last Airbender” series. Viacom acquired the media startup Awesomeness earlier this year and later installed its co-founder Brian Robbins as head of Nickelodeon.
“This quarter’s results suggest that Bob Bakish and his team are turning around the company,” said Paul Sweeney, a Bloomberg Intelligence analyst, via email. “The question is whether Viacom can compete as a stand-alone company in a rapidly consolidating industry.”
With founder Sumner Redstone now 95 and ailing, his daughter Shari Redstone has moved to consolidate her control over Viacom and sister company CBS Corp. The 2006 split of the two companies was meant to unlock value for shareholders. But Viacom stock has slumped from a 2014 peak, and Shari Redstone has indicated she’d like to rejoin Viacom and CBS -- she has agreed not to propose such a merger for about two years.
Viacom shares initially rose in New York trading Friday but swung negative, falling as much as 2.7 percent. The shares have done better than peers this year. They are up 3.3 percent for the year, while the S&P 500 media index dropped 4.3 percent.
--With assistance from Keith Gerstein.
To contact the reporters on this story: John J. Edwards III in Geneva at jedwardsiii1@bloomberg.net;Kamaron Leach in New York at kleach6@bloomberg.net
To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Cecile Daurat
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