Par’s back in the black

D'works deal helps Viacom's Q2 profit increase

Viacom came out swinging Wednesday as Paramount was back in the black and CEO Tom Freston declared that it’s “re-emerging as a top-tier studio in Hollywood.”

The slimmed-down new Viacom reported robust quarterly numbers that reinforced just how critical the DreamWorks deal was — bringing in hefty theatrical distribution fees and international TV license fees and keeping the studio’s homevideo biz on an even keel.

Viacom’s net profit surged 23% to $437 million. Revenue jumped 24% to $2.85 billion, with about $345 million of that flowing from distribution of DreamWorks Animation and live-action fare.

The stock, which closed down 2% Wednesday, was up a hefty 3.7% to $35 in after-hours trading on the numbers, released after the market closed.

Par swung to a profit of $6.4 million from a $20 million loss. Revenue soared 59% to $1.1 billion.

Total domestic revenue climbed 39%, or $190 million, all of it attributable to DreamWorks.

Theatrical revenue grew by $169 million thanks largely to distribution fees from “Over the Hedge.” International theatrical revenue from “Mission: Impossible III” and “Failure to Launch” bested ’05 offerings “War of the Worlds” and “Sahara.”

Homevid revenue nosed up 2% as lower revenue from Par product was offset by the addition of DreamWorks revs.

DreamWorks contributed $109 million as overall TV license fees increased by $207 million.

Freston acknowledged during a conference call that “Mission” didn’t perform “as well as we’d hoped it would” but said, “We have a lot to be proud of.” He mentioned hefty fees from “Over the Hedge” and the strong perfs of “Nacho Libre” and “An Inconvenient Truth.”

For Par, much is riding on Oliver Stone’s “World Trade Center,” which opened Wednesday.

Freston also praised the studio’s management team under studio chief Brad Grey. The hiring of former Universal exec Fred Huntsberry as chief financial officer completes the management team.

On the cable side, operating income rose 12% to $710 million, driven by MTV Networks. Revenue rose 8% to $1.75 billion.

Freston tried to reassure Wall Streeters who remain antsy over MTV’s longer-term growth prospects.

Domestic ad revenue grew 10% year on year to $969 million. That’s up from 6% growth in the first quarter. Total U.S. cable revenue was up 9%.

International ad revenue fell 2% — vs. a 13% dip in the first quarter — on continued softness in the nets’ two largest markets, Germany and the U.K. Total international cable revenue was up 4%.

Ancillary revenue was hit by slower homevideo sales for Comedy Central, which had “The Chappelle Show” on the market in 2005.

Operating expenses rose 8% on higher programming and productions costs at Comedy Central for “The Colbert Report,” “The Daily Show,” “Mind of Mencia” and “Showbiz Show.”

Freston said about 6% of MTV deals in the upfront were for digital platforms, and he expects that percentage to rise as agencies get more adept at packaging traditional and new media.

He cited strong progress in digital as a key driver of Viacom. Company announced Wednesday a $200 million purchase of Atom Entertainment. It recently acquired Y2M, which owns a group of online college newspapers. And it inked a landmark deal under which Google will stream MTV clips with embedded advertising on the service.

Corporate expenses jumped by $12 million to $54 million on higher employee-related costs including the awarding of stock options.

Debt stood at $7.7 billion.

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