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Viacom Posts Loss, But Tops Wall Street Expectations
Viacom on Thursday reported lower fiscal second-quarter earnings, but exceeded Wall Street expectations.
The entertainment conglomerate, led by CEO Philippe Dauman, reported adjusted earnings of $467 million, which excludes a big charge, compared with $482 million in the year-ago period, down 3 percent. Earnings per share reached $1.16, up from $1.08.
The company had previously announced it would take a $785 million pre-tax charge for a slew of layoffs and reorganization moves, and it said Thursday the charge ended up amounting to $784 million. When including the charge, Viacom swung to a quarterly loss of $53 million, or 13 cents a share.
Wall Street had on average projected earnings of $433.6 million and earnings per share of $1.06 excluding the charge. Stifel Nicolaus analyst Benjamin Mogil in a first reaction note summarized the results this way: "In-line revenues but stronger cost controls."
Viacom has said its restructuring moves would provide annual savings of about $350 million. The savings in the current fiscal year 2015 will be approximately $175 million.
The company on Thursday reported higher revenue in its media networks unit despite a 5 percent U.S. advertising revenue drop amid continued ratings softness. Worldwide advertising revenues rose 4 percent driven by the acquisition of U.K. broadcaster Channel 5 last year.
Film revenue fell 21 percent amid declines in TV license fees and home entertainment revenue, impacted by the number and mix of available titles. Film revenue declined 17 percent, with theatrical down 10 percent "due to lower carryover revenues from releases in the prior quarter," the company said.
Overall revenue fell 3 percent in the quarter to $3.08 billion, with currency woes being a drag in the company's foreign businesses where weaker local currencies translated into lower dollar figures.
Adjusted operating income declined in both Viacom units. The media networks unit posted a 5 percent decline as higher revenue were more than offset by increased programming and promotional expenses. Film unit adjusted operating income fell to $1 million from $11 million, "reflecting the decline in revenues, partially offset by decreased expenses," the firm said.
Sumner Redstone, executive chairman of Viacom, said: "Viacom's outstanding brands deliver great entertainment content on every screen, from film to television, mobile and beyond. We have the global footprint and the expert leadership to continue our success."
Said Dauman: "We are deeply committed to investing in more and more original content, expanding in international growth markets, where we are launching networks at a rapid pace, and adapting to changes in technology and consumer behavior."
He called Paramount Pictures "a proven hit maker," saying: "The SpongeBob Movie: Sponge Out of Water was the first title from our brand new Paramount Animation division and a box office success around the world, and we look forward to the releases of Terminator Genisys and Mission: Impossible - Rogue Nation this summer."
Added Dauman: "With our strategic realignment largely complete, Viacom is in excellent position to take full advantage of the many opportunities in the rapidly evolving media environment."
This article was first published by The Hollywood Reporter.