Viacom Quarterly Earnings Drop, Film Unit Posts $136M Loss

Ben Stiller and Owen Wilson
Pascal Le Segretain/Getty Images For Paramount Pictures

Ben Stiller and Owen Wilson, as Derek Zoolander and Hansel, walk the runway at the Valentino Fashion Show during Paris Fashion Week at Espace Ephemere Tuileries on March 10, 2015 in Paris, France.

Viacom on Thursday morning reported lower adjusted fiscal second-quarter earnings, but exceeded most Wall Street expectations. The company's film unit posted a big quarterly loss though as two releases underperformed at the box office, and at its TV networks, U.S. advertising and affiliate fee revenue saw bigger drops than analysts had expected.

The entertainment conglomerate, led by CEO Philippe Dauman, reported adjusted earnings of $303 million. That compared with $467 million in the year-ago period. On a non-adjusted basis, the company had in the year-ago period recorded a loss of $53 million when including a $785 million pre-tax charge for a slew of layoffs and reorganization moves in the year-ago period. Adjusted earnings per share fell to 76 cents from $1.16 in the year-ago period.

The company, which is in the process of selling a minority stake in Paramount Pictures, saw its film unit swing to a quarterly operating loss of $136 million after a year-ago profit of $1 million due to the disappointing performances of Zoolander 2, which brought in $56 million worldwide on a $50 million production budget, and Whiskey Tango Foxtrot, which reached just $23 million worldwide on a $35 million budget.

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Dauman recently guided that the quarterly loss would be around $100 million higher than the company had expected before the two films' under-performance. Film revenue only declined 1 percent, or even rose 1 percent when adjusting for currency trends, though as Daddy’s Home and The Big Short, both released late in the previous quarter, boosted theatrical revenue above a weak year-ago period. That was offset by declines in home entertainment and ancillary revenue.

Meanwhile, at Viacom's media networks unit, U.S. advertising revenue again dropped amid continued ratings challenges. Overall, its operating profit fell 11 percent to $805 million amid a 3 percent revenue decline.

U.S. advertising revenue decreased 5 percent, compared to most analysts expectation for a 3 percent-4 percent drop, "as pricing increases were more than offset by softer ratings at some of our networks," the company said. International advertising revenue declined 1 percent, driven by a 7 percent adverse currency exchange effect. Adjusting for the currency headwinds, international advertising revenue rose 6 percent, driven principally by growth in Europe.

U.S. affiliate revenue at the media networks division fell 2 percent, with the company citing "a modest decline in subscribers and a previously disclosed rate adjustment with a major distributor, partially offset by rate increases across the remaining subscriber base." International affiliate revenue increased 4 percent, or 11 percent when adjusting for negative currency effects, driven by new channel launches, increased subscribers and rate increases.

A longer version of this story was originally published by The Hollywood Reporter. Click here to keep reading.


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