Viacom on Tuesday posted better-than-expected fiscal first-quarter earnings, but lower-than-forecast revenue for the period.
The earnings update came two years after CEO Bob Bakish had unveiled a new strategy focused on the company’s six flagship brands. The company’s stock was little changed before the market opened.
Viacom reported net earnings from continuing operations of $318 million, compared with a year-earlier $535 million. The diluted earnings per share from continuing operations came to 79 cents, or $1.12 on an adjusted basis, compared with $1.33 in the year-ago period, or $1.03 on an adjusted basis. That meant a 9 percent increase in the adjusted figure, which Wall Street analysts focus on, exceeded analysts’ forecast of $1.02 per share.
Quarterly revenue rose 1 percent to $3.09 billion, coming in below Wall Street projections. Domestic revenue “held flat as lower advertising and consumer products, recreation and live events revenues were offset by affiliate growth, marking the fourth straight quarter of sequential improvement and second straight quarter of year-over-year growth in domestic affiliate revenues,” the company said.
Viacom chief Bakish on an analyst call focused on improved performance at MTV, the benefits of a pending acquisition of Pluto TV as a video streamer and efforts to reinvigorate Nickelodeon under new chief Brian Robbins. “Viacom today is a story of execution, and evolution. And in Q1, we delivered strongly on both, which in turn produced impressive financial results,” he said as he opened the call.
Bakish said Viacom content, which has been withheld in part from existing subscription VOD services during the last two years, will strengthen Pluto TV’s online streaming offerings. He added Pluto TV “will have access to our brands and marketing capabilities to grow audience and usage, as Pluto has had modest marketing in the past.”
Bakish also said the video streamer had international potential, as he pointed to “a very compelling near term opportunity to create a Spanish language offering.” The Viacom chief, turning to MTV, said the resurgent channel brand under the leadership of Chris McCarthy was “making the most of a changing, yet expanding, ecosystem.”
McCarthy, president of MTV, VH1 and Logo TV, on the call touted ratings growth at the global cable brand. “MTV is a global brand with near-universal awareness, that’s in TV and across every platform, and in this increasingly crowded landscape, a powerful and enduring brand is a clear advantage,” McCarthy argued.
He also pointed to MTV’s having “a treasure chest of IP,” with over 200 properties to be exploited across multiple platforms. Elsewhere, Nickelodeon continues to be a work in progress for Viacom.
Bakish touted a new Nickelodeon management team under Brian Robbins and an upcoming programming slate to be unveiled next week at Toy Fair in New York City. “Yes, Nickelodeon has been a headwind, but we’re all over it. I love what Brian (Robbins) and his team are doing and see a light at the end of the tunnel starting to appear,” he told analysts.
Bakish also announced a theatrical movie deal with Netflix as his Nickelodeon Studios division will produce original animated movies based on The Loud House and the Rise of the Teenage Mutant Turtles properties.
As part of Viacom’s latest financial results, at Paramount Pictures, the bottom line improved to an adjusted operating loss of $90 million from a year-ago loss of $130 million as revenue jumped from $14 million to $621 million. Bernstein analyst Todd Juenger had pointed out ahead of the earnings report that Paramount’s U.S. box office was up over the same quarter of 2017 thanks to Bumblebee and Instant Family, offset by Overlord and Nobody’s Fool.
Increased production from Paramount Television, including the release of Netflix’s The Haunting of Hill House, drove an 84 percent increase in licensing revenue.
At Viacom’s media networks, adjusted operating profit was unchanged at $913 million, but revenue fell 2 percent as advertising revenue dropped 6 percent, including a 3 percent U.S. decline that marked a small improvement over the previous quarter, but affiliate revenue rose 3 percent, led by a 5 percent gain in the U.S.
“Growth in domestic affiliate revenues was driven by contractual rate increases, as well as OTT and studio production revenues,” the company said. “On a constant currency basis, international affiliate revenues were flat in the quarter.” The company said certain components previously reported as ancillary were reclassified to affiliate revenue for the latest quarter, but it didn’t disclose the size of that effect.
Audiences for the company’s TV networks continued to decline, with total viewing down 13 percent in the latest quarter compared with the year-ago period, according to Juenger. “MTV has been the one bright spot, up 13 percent,” he said. “The good news is, MTV audiences have been improving year-over-year for the sixth straight quarter and has been the embodiment of the ‘Viacom turnaround’ that management consistently claims.” The audience growth was driven by Jersey Shore: Family Vacation.
This article was originally published by The Hollywood Reporter.