Viacom posts meager results
A weak third-quarter film slate leads to steep box-office declines
A weak third-quarter film slate contributes to the media company’s revenue and profit declines.
Tom Cruise didn’t arrive soon enough to save media company Viacom Inc. from some precarious thirdquarter financial results.
Cruise has long been one of the brightest stars and biggest moneymakers for Viacom’s movie studio, Paramount Pictures. Over the weekend, crowds f locked to see Cruise reprise his role as agent Ethan Hunt in “Mission: Impossible — Rogue Nation,” which generated more than $120 million in worldwide box-office receipts.
But Cruise’s star power came too late to shield Viacom from a storm that hit media companies this week as they attempt to navigate a fast-changing media landscape.
For the April-to-June quarter, Viacom saw its revenue slide 11% compared with the year-earlier period. Viacom generated $3 billion in revenue in the quarter, missing analysts’ estimates of $3.2 billion.
Viacom has been trying to rebuild after a brutal year that has seen its stock price plunge nearly 45%.
Investors have become increasingly concerned about Paramount’s meager film slate that has led to steep declines in theatrical revenue.
The company also is grappling with troubling ratings declines at its premier television networks: Nickelodeon, MTV and Comedy Central.
Paramount did not release a big film during the April-to-June quarter, and the dearth became a significant drag on the media company’s revenue picture. “Mission: Impossible” had been scheduled for that quarter but was moved to July.
The Paramount film and TV business generated $479 million in revenue in the fiscal third quarter, a decline of 44% from a year earlier. Theatrical revenue was down a whopping 92%.
Viacom’s television networks hit a rough patch too. Ratings collapses at several networks have meant that Viacom had less commercial inventory to sell.
“Domestic advertising revenue -9%; nothing else you need to know,” Bernstein Research media analyst Todd Juenger wrote in a Thursday morning report for investors after Viacom released its earnings report.
For the quarter, Viacom’s cable channels generated $2.6 billion in revenue, the same amount as in the year-earlier period.
Overall, Viacom produced net earnings of $591 million, or $1.47 a share, compared with $610 million, or $1.40 a share, a year earlier.
Until just a few months ago, Viacom was buying back shares, helping to boost its earnings per share. The company said it would resume the buybacks this fall.
Viacom had the misfortune of releasing its financial results in the middle of a bruising week in which Wall Street has pummeled media stocks.
Investors got spooked after Walt Disney Co. executives warned late Tuesday of lower profits at ESPN and other cable channels because of an acceleration in cable cord-cutting by consumers. That sparked the media stock sell-off, and Viacom has been particularly hard-hit.
“There is no question that our industry is in the midst of significant change,” Viacom Chief Executive Philippe Dauman told analysts. “Change can create uncertainty and concern, but with change also comes opportunity.”
Investors grabbed the opportunity to sell their shares.
On Thursday, Viacom shares tumbled $7.31, or 14.2%, to $44.10. A year ago, Viacom’s stock price was hovering around $80 a share.
Dauman also sought to reassure investors that Paramount was poised for a comeback. Next year, its pipeline will return to more normal levels, with 15 films scheduled for release.
“After a tough year,” Dauman said, “we believe Paramount is positioned to grow strongly next year and in the years to come, fueled both by a reinvigorated film business and our new highgrowth TV production business.”