Leftovers vexing Viacom

Par mars conglom's profits

Losses from pics on Paramount’s old slate contributed to a dip in Viacom profits over the holidays, even as the company’s cable biz plows ahead.

In the fourth quarter, company saw a drop of 5% in film revenue to $788 million, with worldwide theatrical revenue sliding 42%. Pics including “Elizabethtown” (under $40 million worldwide) and “Get Rich or Die Tryin’ ” (under $35 million worldwide) failed to pull their weight at the box office. Company also released “Aeon Flux,” “The Weather Man.” and “Yours, Mine and Ours.”

Homevid revs, however, rose 6%.

Overall, Viacom’s entertainment unit, which includes the studio and homevid biz, swung to a $94 million loss in the fourth quarter from a $46 million profit a year earlier. Loss led to a drop of nearly 70% in net earnings to $130 million.

But cable profits climbed 15% to $714 million, fueled by big ad revenue growth at Spike, which saw increases of 32%.

Numbers were the first to be disclosed by Viacom since its split from CBS, though they covered a period in which the two companies were still conjoined.

Meanwhile, the sale of the 61-title DreamWorks library will likely close soon, execs said, and they expect it to fetch at least $900 million. Earlier the company had put the minimum at $800 million-$850 million. Billionaire George Soros has been put forth as the likely buyer.

Many members of Lansing’s regime — and the pics they had in production — were scrapped when Brad Grey took over as studio chief earlier last year.

And after Par acquired DreamWorks in late 2005, more than 100 staffers were let go, leading to tension and uncertainty at the new studio.

Viacom said it took a hit that totaled $71 million on severance costs from layoffs at Paramount connected to both events, as well as staff cuts at MTV. The loss is actually greater than the amount of money the company says the cuts will save it this year –$60 million-$70 million.

The studio considers the new Par slate as beginning with the release of “Mission: Impossible 3” in May, execs told analysts in a conference call. Numbers are mainly reported on a pro forma basis because company was joined with CBS when they were incurred. The results and comparisons essentially break out the Viacom businesses as though they were a separate company.

In the call, Viacom topper Tom Freston also said company is in active discussions with several Web portals for a “larger content play” that would offer both exclusive and nonexclusive content of cable series, which would presumably include popular skeins from MTV, Nickelodeon and Comedy Central.

“We need to make sure we’re accessible everywhere to consumers beyond our own destinations,” he said.

Until now, no cable series has made itself available via a Web portal, a la deals CBS has made for its skeins with Google.

For the fourth quarter, cable revenue at the company increased 16% to $1.99 billion, fueled largely by growing ad revenues.

Overall, Viacom’s revenues jumped 9% for the quarter, while they climbed 18% for the year. Profits rose 12% for the year.

So far for this year at nets like Spike, MTV and Nick so far are flat or slightly down, with notable exception of BET, which is up 29%.

On the library sale, Viacom is still talking with Soros Capital Management, although a period of exclusivity has expired.

Given the hefty pricetag, Soros may be joined by Dune Capital, which recently inked a slate financing deal with 20th Century Fox. Dune itself is a spinoff of Soros.

Goldman Sachs, led by banker Joseph Ravitch, is said to be readying an offering worth about $930 million. Ravitch helped put together financing for the Weinstein Co. and the sale of MGM to Sony and a group of investors.

And another possible offer is said to be coming from Dresdner Bank representing some Russian investors.

As for the studio, Freston called the integration between Par and DreamWorks “done” and said he thought that the staff in place represented “the best of both companies on what is now one single team.”

(Jill Goldsmith contributed to this report.)

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