Viacom stock drops amid cord-cutting fears; Paramount Pictures suffers another loss

Cord-cutting squeezed Viacom Inc. earnings as the owner of cable channels MTV, Comedy Central and Nickelodeon struggles to improve its fortunes in a more challenging media environment. Viacom said its revenue increased 3 percent to $3.3 billion in its fiscal fourth quarter, beating analysts’ expectations. However, domestic TV advertising revenue was flat and affiliate fees from satellite and cable TV operators declined 3 percent. For the quarter that ended Sept. 30, Viacom produced net earnings from continuing operations of $674 million, up from $254 million in the comparable quarter last year. Viacom’s share price has slumped all year over worries whether payTV operators would continue to pay premiums to carry Viacom’s television channels. Its shares are down more than 30 percent since January. The company, however, was able to strike a hard-fought distribution deal with cable giant Charter Communications in the quarter, keeping its largest channels in the most popular packages. Viacom’s Paramount Pictures, meanwhile, posted an adjusted operating loss of $43 million. The results were dragged down by a $59 million expense due to the termination of a film financing deal with the Chinese firm Huahua Media. Paramount had been banking on that deal to provide a quarter of the financing for its film slate over three years, but the studio’s new leadership cobbled together several smaller partnerships to pick up the slack.

In a bright spot, revenue at the movie studio increased 2 percent to $789 million with higher licensing revenue from its television operations and film licensing. However, theatrical revenues fell 43 percent, to $115 million, because of its weak film slate that included the disappointing “Mother!” from Darren Aronofsky. Domestic ticket sales were down 75 percent; international sales fell 12 percent. Paramount ranks seventh at the box office, trailing the other major film studios, and claims just 5 percent of the market, according to Box Office Mojo.

Paramount’s loss was significantly smaller than in the comparable quarter in 2016.

At Viacom’s cable television unit, revenue increased 3 percent to $2.55 billion on higher advertising revenues. International revenue was up 24 percent to $593 million with the purchase of a South American operation, while domestic revenue slipped 2 percent to $1.96 billion. Advertising revenue was up 6 percent to $1.22 billion. Domestic advertising was flat at $936 million.

Affiliate fees declined 1 percent to $1.15 billion.