Viacom Q4 Profit Down 69 Percent

NEW YORK: Restructuring charges and higher expenses were cited as the reasons for the 69-percent drop in Viacom’s fourth-quarter profits to $173 million, on stable revenues of $4.2 billion.

For the full-year, meanwhile, revenues gained 9-percent to $14.6 billion, with a net profit of $1.25 billion, down 32-percent on the year-ago period.

The quarterly and full-year results were impacted by $454 million in charges, resulting from a restructuring as well as a write-down of programming and other assets.

"There is no doubt that global economic conditions are difficult right now," said Sumner Redstone, the executive chairman of Viacom. "Having worked through turbulent times before, I know that it is in such times that companies with strong, resilient assets distinguish themselves. With enduring brands and a proven leadership team, Viacom is well prepared to manage through this environment and thrive over the long term."

Philippe Dauman, the president and CEO of Viacom, added: "Our fourth quarter results reflect the realities of a challenging economy. The broad marketplace conditions weighed on our advertising, home entertainment and consumer products businesses. That was offset, however, by solid growth in our affiliate and theatrical revenues, both up double digits. Ratings trends at several of our core networks are improving as new programming gains traction and we are looking forward to a promising motion picture slate anchored by three upcoming tentpoles, J.J. Abrams’ Star Trek, Transformers 2: Revenge of the Fallen and G.I. Joe. While our strategy remains firmly focused on building our brands for long-term success, we also have great confidence in our ability to execute successfully today. We acted early and decisively to prepare for the rapid decline in economic conditions. Without sacrificing the creation of great content, we aggressively managed our cost structure, which significantly boosted cash flow and further strengthened our balance sheet. The restructuring actions we took late last year will result in approximately $200 million in savings this year. While it is difficult to know how long these conditions will persist, our actions have positioned us very well to seize the opportunities that will arise as the economy recovers."

In the year, Media Networks revenues gained 8 percent to $8.76 billion, driven by a 32-percent increase in worldwide ancillary revenues to $1.41 billion. Worldwide affiliate revenues increased 12 percent to $2.62 billion and worldwide advertising revenues grew 1 percent to $4.72 billion. In the quarter, meanwhile, Media Networks revenues were stable at $2.48 billion, with worldwide affiliate revenues up 12 percent to $667 million. Worldwide ancillary revenues were flat at $462 million and worldwide advertising revenues declined 3 percent to $1.35 billion. 

Filmed Entertainment revenues grew 10 percent to $6.03 billion in the year, led by a 17-percent increase in theatrical revenues to $1.71 billion and a 9-percent rise in home-entertainment revenues to $2.72 billion. Worldwide television license fees increased 3 percent to $1.33 billion. In the quarter, however, Filmed Entertainment was down 2 percent to $1.81 billion, with a 6-percent decrease in home-entertainment revenues to $1.02 billion. Theatrical revenues were up though, by 28 percent to $350 million, but television license fees fell 13 percent to $351 million and ancillary revenues increased 9 percent to $86 million.