Viacom's TV Business Continues to Suffer From Cord Cutting -- Update

By Austen Hufford 

Viacom Inc. reported a larger-than-expected quarterly revenue decline, as its television networks in the U.S. saw less advertising and subscription revenue.

Still, the company said it had made progress on cost cuts and that it is on track to achieve $100 million in new cost savings this year and "hundreds of millions more" in 2019. It also beat analysts' profit expectations in its latest quarter.

Viacom's quarterly results come as investors have been watching a potential merger between the company and CBS Corp. Last week the companies disclosed that their boards had formed a special committee to evaluate a potential merger, a deal that would reunite two big pieces of the Redstone family's media empire.

Shares in Viacom, which owns networks including MTV, Comedy Central and Nickelodeon, rose 9% in morning trading Thursday.

For its fiscal first quarter, Viacom reported a profit of $537 million, or $1.33 a share, up from $396 million, or $1.00 a share, a year earlier. Excluding a tax benefit and other items, Viacom posted an adjusted profit of $1.03 a share, down a penny from the prior year. Analysts polled by Thomson Reuters expected Viacom to earn a profit of 94 cents a share.

Revenue fell 7.6% to $3.07 billion, below analysts' estimates of $3.14 billion.

Viacom, like other linear-television channel providers, is hurt when viewers cut their cable subscriptions from both lower advertising payments and a decline in affiliate revenue generated through subscription fees paid to cable companies.

In its first quarter, Viacom said U.S. advertising revenue fell 5% to $937 million, due to lower linear impressions. Higher rates and growth in digital advertising revenue didn't offset the declines. Domestic affiliate revenue decreased 8% to $907 million due to subscriber declines and lower subscription video-on-demand revenue, which was partially offset by rate increases.

Excluding a favorable impact from currency-exchange rates, international network revenue rose 13% in the quarter, driven by the company's purchase of Argentina's Televisión Federal SA for $345 million in cash and growth in Europe.

Revenue in Viacom's movie division fell 28% in the quarter to $544 million, as U.S. revenue fell 42% to $270 million and international revenue declined 6% to $274 million. The unit saw declines in theatrical, licensing and home-entertainment revenue.

During the quarter, a Broadway musical based on the children television show "SpongeBob SquarePants" opened, showing how Viacom is working to expand its brands into more mediums.

Write to Austen Hufford at [e-mail]

(END) Dow Jones Newswires

February 08, 2018 10:22 ET (15:22 GMT)

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