* Q1 EPS $.098 vs Street view $0.89
* Cable network revenue up 5 percent
* Nickelodeon ratings improving, unhurt by Netflix - execs
* Epix to stay on Netflix under any circumstance - CEO
* Shares up nearly 5 percent
By Yinka Adegoke
May 3 Viacom Inc posted a
higher-than-expected profit on Thursday, boosted by an increase
in revenue from cable network fees and digital licensing of its
TV shows and movies, and its shares rose nearly 5 percent.
The parent of MTV and Comedy Channel benefited mainly from
an increase in affiliate fee revenue paid by cable and satellite
distributors. This helped offset relatively flat advertising
revenue growth in a quarter that has been dominated by concerns
of weak viewer ratings at the company's flagship children's
network, Nickelodeon, and also at MTV.
Advertising revenue at TV networks typically rise or fall in
step with the estimated number of viewers watching programs as
reported by independent companies like Nielsen.
Ratings were improving at both networks, executives told
However, Nielsen ratings for Nickelodeon have fallen 30
percent this year. Viacom is disputing the measurements'
Viacom's Chief Operating Officer Thomas Dooley told
analysts, "We are seeing the strengthening in the overall tone
of the marketplace in terms of the (advertising) volume coming
into the marketplace that has offset the impact of the ratings
deficiencies that we've had primarily on one of our larger
channels, and that would be Nickelodeon."
The ratings issue has not had a significant impact on
Viacom's ability to attract or satisfy the advertising demand it
has had at its big four networks, he said.
Viacom cautioned that affiliate fee revenue would fall in
the current quarter from a year earlier due to the timing of
deals, but said it would return to double-digit growth in the
There has been strong speculation and some research claiming
that Nickelodeon's ratings are being hurt by the availability of
its children's programming on the online video service Netflix
Analysts at Bernstein Research published their proprietary
set-top box findings last week, which showed children's
programming in particular had taken "a clear and sizable hit"
But Viacom Chief Executive Philippe Dauman rejected the
premise and pointed out that Netflix, with 23 million
subscribers, is in fewer than a quarter of U.S. television
"Since we get the streaming data on our (Netflix) content, I
can tell you that the time spent on Nickelodeon content on
Netflix is approximately 2 percent of the time spent on our
Nickelodeon channel," said Dauman.
"It would have a minimal impact here."
He was similarly supportive of Viacom's Netflix deal with
its pay-TV channel Epix. Reuters reported last week that Epix is
holding talks with Apple Inc for when the two-year
exclusivity clause of the Netflix/Epix five-year deal expires in
Dauman said there is a lot of interest in new Epix
distribution deals but they would remain in the partnership.
"We will continue to be on Netflix under any circumstance,"
Net income from continuing operations rose to $588 million,
or $1.08 per share, in the second quarter ended on March 31 from
$376 million, or 63 cents per share, a year earlier.
Excluding items, earnings from continuing operations were 98
cents a share. Analysts on average expected 89 cents, according
to Thomson Reuters I/B/E/S.
Revenue rose 2 percent to $3.33 billion.
Cable network revenue rose 5 percent, primarily because of
an increase in money from fees from cable and satellite TV
Those fees rose 15 percent in the United States and 17
percent worldwide, also benefiting from digital distribution
Advertising revenue rose by 1 percent in the United States
and was flat internationally.
At Viacom's Paramount movie studio, revenue decreased by 5
percent to $1.17 billion due to a weak box office performance at
Shares of Viacom were up 3.3 percent at $49 in afternoon