Lower Profit for Viacom

NEW YORK: The ad downturn and declining box-office revenues hurt Viacom’s bottom line in the second quarter, with profit down 32 percent to $277 million on revenues that were down 14 percent to $3.3 billion.

"While the global economy continued to be a challenge in the second quarter, the diversity of our revenue streams, sequential improvement in our domestic advertising sales, our generation of cash and our operational discipline all helped to temper the short-term impact," said Philippe Dauman, Viacom’s president and CEO. "As we look to a longer-term recovery, we continue to manage costs aggressively and make changes in the business that will better position Viacom for growth. Importantly, our efforts to reinvigorate our cable networks’ creative machine are generating positive results, with ratings trends improving across our key networks and record-breaking results for several of our tentpole events, including the MTV Movie Awards and BET Awards ’09. Paramount Pictures’ performance in the second quarter was highlighted by the box office success of its tentpole films Star Trek and Transformers: Revenge of the Fallen. Both films are unqualified blockbusters that will generate substantial profit as they move through their windows."

At the media networks, revenues fell 8 percent to $1.97 billion, delivering an operating income that was down 12 percent to $671 million. Ancillary revenues were down 31 percent, while U.S. advertising fell 6 percent and worldwide ad revenues were down 8 percent. Worldwide affiliate revenues, however, posted a 9-percent increase.

Filmed entertainment revenues fell 22 percent to $1.38 billion and the segment posted a loss of $25 million, as compared with the year-ago profit of $86 million, when the studio released Iron Man and Indiana Jones and the Kingdom of the Crystal Skull. There was a 27-percent decline in theatrical revenues from Q2 last year and a 29-percent fall in home entertainment revenues. Television license fees were up 5 percent in the period.