Television

Viacom reports lower revenue for Q1 2018

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BENGALURU: American multinational media conglomerate with interests primarily in cinema and cable television, Viacom Inc (Viacom) reported lower numbers for the quarter ended 31 December 2017 (Q1 2018, quarter under review) as compared to the corresponding year ago quarter Q1 2017 (y-o-y). The company reported 7.6 percent y-o-y decline in revenue for Q1 2018 at $3,073 million from $3,324 million. Two segments are revenue heads for the company – Media Networks; and Filmed Entertainment.

The drop in revenue reflected declines in both segments says the company in its earnings release. Operating income increased 1.6 per cent y-o-y to $717 million from $706 million, primarily reflecting lower total expenses including the impact of a $42 million restructuring charge recognised in the prior year quarter. Net earnings from continuing operations attributable to Viacom grew 35 per cent, or $139 million, to $535 million, principally due to the enactment of tax reform. Diluted earnings per share for the quarter increased $0.33 to $1.33, and adjusted diluted earnings per share decreased $0.01 to $1.03.

Media Networks

Media Networks revenues decreased 1.1 per cent to $2,560 million in the quarter, as a 1 per cent increase in advertising revenues to $1,308 million was more than offset by a 4 per cent y-o-y decrease in affiliate revenues to $1,094 million. Domestic revenues declined 6 per cent to $1.93 billion while international revenues grew 18 per cent to $631 million. Excluding a 5-percentage point favourable impact from foreign exchange, international revenues increased 13 per cent in the quarter, primarily driven by a 6-percentage point favourable impact from the acquisition of Telefe, as well as growth in Europe.

Domestic advertising revenues decreased 5 per cent to $937 million, reflecting lower linear impressions partially offset by higher pricing, as well as growth in digital advertising revenue. International advertising revenues increased 22 per cent to $371 million. Excluding a 5-percentage point favourable impact from foreign exchange, international advertising revenues increased 17 per cent, principally due to a 10-percentage point favourable impact from the acquisition of Telefe, as well as growth in Europe.

Domestic affiliate revenues decreased 8 per cent to $907 million, primarily due to subscriber declines and lower SVOD revenues, partially offset by rate increases. International affiliate revenues grew 18 per cent to $187 million in the quarter.

Excluding a 5-percentage point favourable impact from foreign exchange, international affiliate revenues grew 13 per cent driven by organic growth, as well as a 2-percentage point favourable impact from the acquisition of Telefe.

Ancillary revenues grew 5 per cent to $158 million in the quarter, including a 2-percentage point favourable impact from foreign exchange. Domestic ancillary revenues increased 8 per cent to $85 million and international ancillary revenues increased 1 per cent to $73 million.

Adjusted operating income for Media Networks decreased 7 per cent to $913 million in the quarter, principally due to an increase in segment expenses and lower revenues

Filmed Entertainment

Filmed Entertainment revenues decreased 28 per cent to $544 million in the quarter, with domestic revenues down 42 per cent to $270 million, and international revenues down 6 per cent to $274 million. Theatrical revenues declined 48 per cent to $100 million due to the number and mix of current quarter releases. Domestic and international theatrical revenues decreased 49 per cent and 46 per cent, respectively.

Licencing revenues decreased 13 per cent to $213 million in the quarter. Domestic licensing revenues decreased 36 per cent while international licencing revenues grew 8 per cent, primarily driven by the mix of titles available in each market.

Home entertainment revenues were down 25 per cent to $183 million, principally due to the comparison against the release of Star Trek Beyond in the prior year quarter. Domestic home entertainment revenues decreased 38 per cent while international revenues increased 1 per cent. Ancillary revenues decreased 38 per cent to $48 million, with domestic ancillary revenues down 49 per cent and international ancillary revenues up 27 per cent.

Filmed Entertainment reported an adjusted operating loss of $130 million in the quarter compared to $180 million in the prior year quarter, an improvement of $50 million that primarily reflects lower operating expenses.

Company speak

Viacom President and CEO Bob Bakish said, “In the quarter, Viacom aggressively drove progress on our strategic plan, delivering improvements in our business and positioning the company for the future. Viacom’s most watched portfolio of domestic cable brands grew viewership share in the quarter, led by our powerful flagship networks, which now includes Paramount Network – the biggest and most ambitious network rebrand in our history. Internationally, we continue to deliver double-digit top-line and bottom-line Media Networks gains while launching innovative new partnerships in growth territories around the world.

Adding further, Bakish said, “Viacom has also made considerable progress in its push to accelerate consumption and monetisation on next-generation platforms, achieving substantial growth in worldwide digital advertising revenues, expanding distribution on fast-growing virtual MVPD and mobile services, and ramping up resources and talent at Viacom Digital Studios. Additionally, since the end of the quarter, we continued to expand our digital capabilities with the acquisition of influence marketer WHOSAY and the world's premier online video event, VidCon. In addition, our strategy to further diversify our core properties offscreen through live events, hospitality and consumer products continues to progress, with the much anticipated Broadway premiere of the SpongeBob SquarePants musical in the quarter, along with new initiatives across our portfolio.

“We remain deeply committed to maintaining strong financial discipline and delivering returns for our shareholders. In the quarter, Viacom continued to improve its leverage profile and we are on track to achieve $100 million in new cost savings in the current fiscal year, and hundreds of millions more in 2019,” concluded Bakish.

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