Box office hits help lift Viacom profit
NEW YORK (Reuters) - Viacom Inc's quarterly profit rose 15 percent, breezing past expectations, as consumers set aside money worries to take in hit movies like "Transformers" and scoop up the new Beatles video game.
Cost-cutting also helped Viacom, the first of the major media conglomerates to report quarterly earnings. Signs that consumers were willing to open their wallets -- and suggestions of a slight improvement in advertising sales -- may bode well for Time Warner Inc and News Corp.
Viacom, which runs a host of media businesses including MTV, Comedy Central and the Paramount movie studio, said on Tuesday that profit rose to $463 million, or 76 cents a share, from $401 million, or 65 cents a share, in the same period a year ago. Revenue fell 3 percent, largely in line with Wall Street expectations.
Adjusted earnings totaled 69 cents per share, well ahead of the 57 cents per share analysts had expected. Shares of Viacom rose slightly in morning trading.
Viacom is not as dependent on advertising as some media companies -- such as corporate sibling CBS Corp -- and is generally helped by fees that cable companies pay to carry its networks. Affiliate sales rose 10 percent in the quarter.
Viacom nonetheless gets about 30 percent of annual revenue from ads, and the slump has proven painful. In the third quarter, U.S. ad revenue fell 4 percent, but executives pointed to signals that the ad climate had improved.
"Over the course of the third quarter, we started to see some of the negative economic trends that we've all been dealing with begin to attenuate," Chief Executive Philippe Dauman told investors on a conference call.
"While I expect the road to recovery will be a bumpy one, I do believe the economy, particularly in the U.S., now is moving in the right direction," he added.
A solid quarter at the box office from Paramount helped make up for lower ad revenue. While DVD sales slumped, pulling worldwide home entertainment revenue down 21 percent, consumers showed a willingness to hit the movie theaters during the peak summer months.
"Transformers: Revenge of the Fallen" and "G.I. Joe: The Rise of Cobra" jump-started Paramount's box office totals, As worldwide theatrical revenue rose 16 percent in the quarter, the filmed entertainment division returned to profitability.
The company also cited "strong" sales of the new video game "The Beatles: Rock Band," though it did not break out figures for the game in its quarterly earnings release.
Still, overall revenue fell to $3.32 billion, largely in line with the $3.3 billion expected from analysts polled by Thomson Reuters I/B/E/S.
Viacom banked heavily on cost-cutting during the quarter as a result. Total expenses dropped nearly 7 percent.
Shares of Viacom, up 47 percent this year, were up less than 1 percent at $28.22 on the New York Stock Exchange. Earlier in the session they jumped as much as 3.6 percent.
(Reporting by Paul Thomasch; Editing by Derek Caney, Dave Zimmerman)