Traditional pay-TV outlets may be threatened by cord-cutting, but cable conglomerate Viacom was able to defy those trends and post a solid quarter led by stabilization in its media networks division and a big increase in film revenues.
For the three months ending June 30, which Viacom classifies as its fiscal third quarter, the film and TV conglomerate reported revenue of $3.36 billion and earnings of $1.17 a share. That compares with the $3.1 billion in revenue and earnings of $1.05 a share the company reeled in during the same time frame last year. Analysts had estimated Viacom would report revenue of $3.3 billion and earnings of $1.05 a share, on average.
“In the third quarter, Viacom strengthened its top line, with growth in advertising and affiliate revenues and gains across its Filmed Entertainment segment, while continuing to execute on a strategic plan to reinvigorate our brands, break down silos, deepen our relationships with business partners and reposition Paramount for the future,” Viacom President and CEO Bob Bakish said in a statement accompanying the earnings. “Among other recent successes, the Company entered into an unprecedented distribution and data partnership with Altice USA, secured a significant cross-platform talent agreement with award-winning writer, director and actor Tyler Perry and recorded quarterly year-over-year ratings growth across our Media Networks portfolio, with strong momentum at our flagship networks, including MTV. We also further delevered our balance sheet by redeeming over $1 billion of outstanding debt and completing the sale of our substantial interest in Epix.”
While Paramount Pictures may be its most famous asset, most of Viacom’s revenue comes from its cable networks, which have faced plenty of challenges in the era of cord-cutting and streaming television. Millions of Americans have moved from traditional pay-TV providers to internet-based “skinny bundles,” which offer fewer channels — and for some, none of Viacom’s. The company’s networks are on DirecTV Now and Sling TV, but not YouTube TV or Hulu with Live TV.
To bolster its position with distributors, Viacom bid for fellow pay-TV conglomerate Scripps Networks Interactive, whose HGTV has been one of the few cable success stories in recent years, increasing its prime time viewership by 29 percent since 2013. However, Discovery Communications was able to beat out Viacom for Scripps, agreeing on a $14.6 billion deal early Monday.
Paramount, Viacom’s film studio, hasn’t been a particularly strong performer as of late, but had a strong bounce-back quarter with a 36 percent increase in filmed entertainment revenue. Well-respected former Fox film chief Jim Gianopulos was named CEO of Paramount Pictures at the end of March and should instill some confidence in the studio.
It hasn’t been an across-the-board win, though: Paramount’s summer blockbuster “Transformers: The Last Knight,” was by far the weakest performer both domestically and internationally out of the five movies in that franchise, and $110 million anime adaptation “Ghost in the Shell,” starring Scarlett Johansson, grossed just $170 million worldwide. Paramount is also still waiting on a $1 billion slate financing deal with China’s Huahua Media and Shanghai Film Group, which was announced in January, to go into effect.
Viacom will hold a conference call at 4:30 p.m. ET to discuss the earnings release.