As if it didn’t have enough to worry about, Paramount Communications Inc.’s second-quarter profits fell almost 7% to $ 96.8 million, or 80 cents per share, as poor film performance and higher expenses weighed on the bottom line.
That decline from last year’s comparable $ 102.4 million (86 cents per share) was a full 25 cents below analysts’ mean estimate and dead even with their lowest forecast. But as one Wall Street wag pointed out, “Who cares about that when someone will pay $ 90 a share and up for the stock?” Par shares closed up 75 cents at $ 81.13.
Revenues grew nearly 16% to $ 1.39 billion last quarter from the comparable period of fiscal 1993, helped by a 6% increase in publishing income to a record $ 132.1 million.
Operating income in the entertainment division dropped about 16% to $ 45.3 million last quarter. The pic unit took a loss after writedowns on “Searching for Bobby Fischer,””The Thing Called Love” and “Bopha!” despite gains from “Indecent Proposal,””Sliver” and “The Firm.”
Operating income at the homevideo division also dipped, but earnings rose at theme parks, theaters, TV programming operations and TV stations.
Paramount said it expects “Wayne’s World 2” to bolster its movie biz, noting the pic’s opening weekend B.O. gross of $ 13.5 million. It also touted a promising outlook for 1994 releases, including “Intersection” and “Beverly Hills Cop III.”
Net interest and other investment expense rose to $ 8.1 million, due to acquisitions and lower returns on some investments.
Separately, Moody’s Investors Service cut Paramount’s long-term debt rating to A3 from A2 and lowered its short-term rating to Prime-2 from Prime-1. The agency continues to review Par’s ratings for possible further downgrade and said its combination with either Viacom Inc. or QVC Network Inc. — barring additional equity partners — could result in a speculative grade or “junk” rating.
“The downgrade is based on the fact that a business combination with either (bidder) demonstrates Paramount’s willingness to incur substantially higher financial risks,” Moody’s associate director Richard Stephan and analyst Gery Sampere reported.