Viacom Delivers Solid Q2 Results

Viacom has reported better-than-expected earnings in the second fiscal quarter, with its film unit having swung back to a profit.

Revenues decreased just 3 percent to $3.15 billion, as segment growth in media networks was more than offset by lower filmed entertainment revenues—due mainly to fewer theatrical releases. Overall for its second quarter, Viacom posted a profit of $256 million, up from $121 million a year ago.

Media networks revenues increased 1 percent to $2.43 billion, as strong international growth more than offset slight declines in domestic revenues. Domestic revenues decreased 3 percent to $1.86 billion, while international revenues grew 18 percent to $566 million. Adjusted operating income for media networks decreased 5 percent to $706 million in the quarter, with higher segment expenses.

Filmed entertainment revenues decreased 17 percent to $741 million in the quarter, with domestic and international revenues each down 17 percent to $378 million and $363 million, respectively. Adjusted operating income in the segment was $9 million, compared to a loss of $66 million in the prior-year quarter. The improvement of $75 million reflects lower distribution expenses related to fewer theatrical releases.

Bob Bakish, president and CEO, said, “Viacom continued to accelerate progress against its strategic priorities, delivering improvements across key metrics in the quarter. Our flagship brands increased audience share among important demos for the fourth consecutive quarter, and we saw sequential improvements in domestic advertising and affiliate revenue performance. Internationally, Viacom continued its winning streak, achieving double-digit revenue and profit gains in the quarter while expanding its global footprint through new channel launches and innovative mobile distribution deals across Europe and Asia. Our cost transformation initiatives are well underway; we anticipate more than $100 million in cost savings in fiscal 2018, and now expect over $300 million in run-rate savings in fiscal 2019 and beyond.

“At Paramount Pictures, turnaround efforts have firmly taken hold as the studio improved margins and returned to profitability. This month’s outstanding box-office performance of A Quiet Place, the first film produced and released under the new team at Paramount, is a clear sign of our progress.

“Viacom also took strides to advance its participation into next-generation platforms and solutions. We continued to benefit from growth in the vMVPD space, delivered revenue gains in Advanced Marketing Solutions, and significantly increased original content production through Viacom Digital Studios to drive off-linear consumption. Additionally, we continue to diversify into adjacent businesses by building on our live-events strategy with upcoming tentpoles, including Comedy Central’s Clusterfest, the BET Experience, Nickelodeon’s U.S. debut of SlimeFest and our first-ever VidCon.

“Looking forward, we see continued momentum as we pivot from stabilization and revitalization of our business to a new phase of growth.”