For the first quarter of fiscal 2018, Viacom saw an 8 percent decrease in revenues to $3.07 billion, with weaker performances from the filmed entertainment and media networks segments.
Operating income increased 2 percent to $717 million, primarily reflecting lower total expenses, including the impact of a $42 million restructuring charge recognized in the prior-year quarter. Net earnings from continuing operations attributable to Viacom grew 35 percent to $535 million, mainly due to the enactment of tax reform.
Media networks revenues were down 1 percent to $2.56 billion, as a slight increase in advertising revenues was more than offset by a 4 percent decrease in affiliate revenues. Domestic revenues declined 6 percent to $1.93 billion while international revenues grew 18 percent to $631 million. Without the favorable impact from foreign exchange, international revenues increased 13 percent in the quarter, primarily driven by a 6-percent lift from the acquisition of Telefe, as well as growth in Europe. Domestic ad revenues decreased 5 percent to $937 million, while international ad revenues increased 22 percent to $371 million. Domestic affiliate revenues were down 8 percent to $907 million, and international affiliate revenues grew 18 percent to $187 million. Adjusted operating income for media networks slipped 7 percent to $913 million, seeing an increase in segment expenses and lower revenues.
Filmed entertainment posted revenues that were down 28 percent to $544 million. Domestic revenues decreased 42 percent to $270 million, and international revenues were down 6 percent to $274 million. Theatrical revenues declined 48 percent to $100 million. Domestic and international theatrical revenues decreased 49 percent and 46 percent, respectively. Licensing revenues were 13 percent lower at $213 million. Domestic licensing revenues decreased 36 percent while international licensing revenues grew 8 percent. Home entertainment revenues were down 25 percent to $183 million, facing a tough comparison with the release of Star Trek Beyond in the prior-year quarter. Domestic home entertainment revenues decreased 38 percent, while international revenues were up just slightly at 1 percent. Filmed entertainment reported an adjusted operating loss of $130 million, an improvement of $50 million from the year-ago quarter thanks to lower operating expenses.
Bob Bakish, the president and CEO of Viacom, said, “In the quarter, Viacom aggressively drove progress on our strategic plan, delivering improvements in our business and positioning the company for the future. Viacom’s most-watched portfolio of domestic cable brands grew viewership share in the quarter, led by our powerful flagship networks, which now includes Paramount Network—the biggest and most ambitious network rebrand in our history. Internationally, we continue to deliver double-digit top-line and bottom-line media networks gains while launching innovative new partnerships in growth territories around the world.
“Viacom has also made considerable progress in its push to accelerate consumption and monetization on next-generation platforms, achieving substantial growth in worldwide digital advertising revenues, expanding distribution on fast-growing virtual MVPD and mobile services, and ramping up resources and talent at Viacom Digital Studios. Additionally, since the end of the quarter, we continued to expand our digital capabilities with the acquisition of influence marketer WHOSAY and the world’s premier online video event, VidCon. In addition, our strategy to further diversify our core properties off-screen through live events, hospitality and consumer products continues to progress, with the much anticipated Broadway premiere of the SpongeBob SquarePants musical in the quarter, along with new initiatives across our portfolio.
“We remain deeply committed to maintaining strong financial discipline and delivering returns for our shareholders. In the quarter, Viacom continued to improve its leverage profile and we are on track to achieve $100 million in new cost savings in the current fiscal year, and hundreds of millions more in 2019.”