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Viacom Quarterly Earnings Beat Estimates as Company Explores CBS Merger

Viacom on Thursday posted its fiscal first-quarter earnings, a year after CEO Bob Bakish had unveiled a new strategy focused on the company's six flagship brands.

Viacom on Thursday posted its fiscal first-quarter earnings, a year after CEO Bob Bakish had unveiled a new strategy focused on the company’s six flagship brands.    

The company reported adjusted net income attributable to the company of $535 million, up 34 percent thanks to a tax cut and a lower expenses line, compared to a year-earlier $396 million. The adjusted diluted earnings per share of 1.03 cents was down from a year-earlier $1.00. That beat a Wall Street analyst forecast of earnings at 98 cents per share.    

The adjusted figures exclude severance costs in the year-ago period and a tax benefit in the latest quarter.    

Viacom overall revenues fell 8 percent due to declines in filmed entertainment and media networks, its two main businesses. The film unit saw revenues fall 28 percent to $544 million on the number and mix of releases during the latest quarter. The company’s film releases in the final quarter of 2017 included Daddy’s Home 2 and Downsizing. The year-ago period had included such theatrical releases as Arrival and Jack Reacher: Never Go Back.


Viacom’s media networks unit saw revenues slip 1 percent to $2.56 billion, as U.S. advertising revenue continued to decline in the latest quarter, by 1 percent to $1.31 billion. Affiliate fee revenue was again an area of weakness as they fell 4 percent to $1.09 billion.    

Viacom executives during a morning earnings conference call chose not to answer questions from analysts on its exploration of a possible merger with CBS Corp., which the companies recently announced.

The Redstone family controls both Viacom and CBS, and the companies’ vice chair Shari Redstone has been speaking out about the benefits of scale. The firms, which separated in 2006, said on Feb. 1 they have formed independent board committees to explore a merger. 

“Since the last time the merger with CBS was explored (September-December 2016), much has changed in the ecosystem, making it more likely that Viacom is open to creating scale (pursuing Scripps Networks is an example),” Jefferies analyst John Janedis said in a recent report. “Ultimately, we expect a decision to come in a matter of weeks given disruption to the workforce.”


Viacom’s media networks unit has been focusing on improving ratings and advertising trends. Evercore ISI analyst Vijay Jayant in an earnings preview highlighted that during October and November, the company’s audience share grew, with Nickelodeon up 16 percent, and MTV up 12 percent “thanks to new programming like Floribama Shore.” 

His prediction: “With that ratings backdrop, we think that domestic advertising will decline 4.8 percent in [the fiscal fist quarter] due to the lingering effects of strategic ad load reductions and a refocusing on fewer key networks.” The analyst also forecast that U.S. affiliate fee revenue could fall 9.4 percent on such recent carriage renewals as with Charter Communications.

This article was originally published by The Hollywood Reporter.