Viacom earnings, revenue top Street estimates on Paramount success
Source: CNBC Business
Viacom reported second-quarter earnings and revenue Thursday that topped analysts’ expectations, as the company continues to focus resources on growing its Paramount business.
Here’s what the company reported vs. what the Street expected:
- Earnings per share: 79 cents adjusted vs. an estimate of 59 cents, according to Thomson Reuters analysts’ estimates.
- Revenue: $3.26 billion vs. an estimate of $3.025 billion, Thomson Reuters analysts said.
Viacom said its sales were driven higher for the quarter as its Paramount division achieved significant revenue gains across all business units: theatrical, home entertainment, licensing and ancillary.
Viacom’s Class B shares were initially trading up Thursday in premarket hours before dropping, and closing down 7 percent. Shares closed Wednesday down nearly 8 percent.
Operating income, though, decreased 43 percent, to $332 million, from a year ago, primarily due to heightened restructuring expenses as new strategic initiatives are put into place and as Viacom focuses on its flagship brands, the company said.
” … We executed quickly on our strategic plan, making significant organizational changes to better focus and align Viacom’s brand portfolio and ensure strong leadership, including the appointment of Jim Gianopulos to chart a new course at Paramount,” Viacom CEO Bob Bakish said in a statement.
Gianopulos, CEO of Paramount Pictures, now is focused on implementing a turnaround success for the studio, Viacom added.
Just earlier this year, Viacom mentioned a turnaround of Paramount and its film studio’s relatively new television business should drive the company’s earnings higher in future quarters.
On Thursday, Viacom reported its filmed entertainment revenues grew 37 percent, to $895 million, during the second quarter. Domestic revenues increased 25 percent, to $458 million, while international revenues increased 51 percent, to $437 million, in this segment.
CEO Bakish has also said he wants to focus specifically on boosting the company’s cable franchise business.
Bakish, who was formerly head of Viacom’s international business, became permanent CEO in December after the Redstone family abandoned exploring a merger of Viacom and CBS, which is also controlled by the family.
Viacom, owner of MTV, Comedy Central, and Nickelodeon, has been making modifications to its business operations lately, following years of declining domestic ad revenues and poor ratings from younger viewers who now watch more content online. Paramount was also suffering from a lack of noteworthy box-office hits.
With a new management team in place, it’s going to “take some time” for Viacom’s strategy to show results, but these latest earnings were strong, Michael Morris of Guggenheim Securities told CNBC’s ‘Squawk Box‘ on Thursday.
“And I don’t think it’s a long honeymoon. … We will start to see new programming on MTV, ratings have improved at some networks,” Morris added. “The future of reaching consumers is you have to be in front of them on multiple screens.”
On Thursday, the media company said its advertising revenues decreased 1 percent, to $1.11 billion, during the latest period. Domestic ad sales fell 4 percent because of higher pricing and lower impressions, Viacom said, while international ad revenues increased 11 percent.
Viacom has said it will focus more resources on its six “flagship” brands: Nickelodeon, Nick Jr., MTV, Comedy Central, BET and Paramount.
As of Thursday’s close, Viacom’s Class B shares have risen almost 4 percent for the year-to-date period but are down about 11 percent over the past 12 months.