Viacom on Thursday reported lower fiscal third-quarter net earnings as its ratings and advertising revenue declined and its film unit had no new theatrical releases.
The entertainment conglomerate, led by president and CEO Philippe Dauman, reported adjusted earnings of $591 million, down 3 percent compared with $611 million in the year-ago period. Revenue fell 10.6 percent to $3.06 billion.
Adjusted earnings per share from continuing operations reached $1.47 though, a record for a fiscal third quarter, the company said. That compared with $1.42 per share a year earlier. Earnings per share have been boosted by stock buybacks, which Viacom recently stopped.
But the company said Thursday it remains committed to resuming the stock buybacks in October.
The quarterly ad decline was less pronounced than the ratings drops would have suggested. Wall Street had, on average, projected earnings of $598 million and earnings per share of $1.47.
"Viacom is meeting the challenges of a rapidly-changing media landscape by creating exciting, unique content that connects with audiences on all platforms," said executive chairman Sumner Redstone. "Our management team is positioning Viacom for success, and I am confident that we have the strategies in place to thrive."
Dauman said: "Viacom continues to drive change in our business, creating unprecedented levels of original content, forging innovative marketing and distribution partnerships, and prioritizing international growth through organic expansion and strategic investments."
He added: "Our media networks are quickly bringing innovative data-based advertising products to market, broadening our sales capabilities and developing new solutions for marketing partners that capture the full scope and depth of our powerful multi-platform brands. We introduced several popular new series in the third quarter, including Lip Sync Battle and Scream, and expanded agreements with important distribution partners."
Concluded Dauman: "Paramount also set the stage for the return of one of the studio's most successful franchises, Mission: Impossible, and is anticipating the broadcast premiere of the first Paramount Television production, Minority Report, next month."
Quarterly media networks revenue increased slightly to $2.60 billion, primarily due to higher affiliate fees, which rose 2 percent driven by rate increases. U.S. advertising revenue fell 9 percent "due to a decline in traditional ratings," while worldwide ad revenue decreased 2 percent, helped by a 58 percent improvement in the company's international business, driven mainly by the acquisition of U.K. broadcaster Channel 5.
Second-quarter media networks adjusted operating income declined 1 percent to $1.11 billion. Excluding a 1 percent adverse impact of foreign exchange fluctuations, figures would have been unchanged.
Filmed entertainment unit adjusted operating income fell 13 percent, or $7 million, to $48 million. Film revenue dropped 44 percent to $479 million as Paramount released no new movie in the latest period. "In the prior year, Transformers: Age of Extinction was released in the third quarter, while this year's summer tentpoles, Terminator: Genisys and Mission: Impossible - Rogue Nation, were widely released in the fourth quarter."
Worldwide home entertainment revenue fell 30 percent, to $199 million in the quarter, and ancillary revenue declined 43 percent, "primarily driven by the benefit in the prior year of the sale of certain distribution rights," Viacom said.
"Viacom domestic ad revenue was down 9 percent, versus consensus expectations of -5.5 percent and our forecast of -5 percent," Sanford C. Bernstein analyst Todd Juenger said in a first reaction. "We estimate conventional audiences were down 18 percent, and Viacom stuffed 7 percent more paid advertising into their linear programming."
He added: As we saw at Scripps and Discovery, this is a sequential slowdown in advertising conversion. In the fiscal second quarter, Viacom delivered -5 percent ad revenue on -22 percent audiences (and +9 percent ad stuffing). In the fiscal first quarter, Viacom delivered -6 percent ad revenue on -18 percent audiences."
This story was originally published by The Hollywood Reporter.