Quarter down due to layoffs, marketing costs
Expenses associated with layoffs at MTV and an increase in marketing costs at Paramount sent Viacom’s profit down in the most recent quarter.Conglom’s profit was down 36% to $203 million in the March quarter, largely as a result of $56 million in reorg costs at MTV and about $170 million in marketing expenditure for Par pics such as “Blades of Glory” and “Disturbia.” Overall, Par lost $105 million after seeing $51 million in operating income in the year-earlier quarter, though company will see the benefits of last quarter’s marketing efforts with the B.O. coin from those pics in the second quarter. Revenue at the film division rose 27% to $1.1 billion for the quarter. During the frame, Par found B.O. success with pics such as “Norbit” and “Dreamgirls.” Together, those two movies have earned nearly $200 million in the U.S. alone since their release. At Viacom’s cable biz, which comprises the bulk of the conglom’s balance sheet, revenue rose 10% while operating income slipped 3% to $602 million, mainly due to the MTVN restructuring. A February reorg at the unit claimed the jobs of about 250 employees, many of them at MTVN’s music group. Overall for the quarter, revenue at the company climbed 16% to $2.75 billion while operating income was down 29% to $443 million. Viacom could face tough comparisons this year after strong cable advertising revenues in fiscal 2006. In a conference call, execs said that ad growth so far this quarter is in the mid-single digits. Earnings numbers came in slightly ahead of the expectations of analysts, who after factoring out MTV costs had forecasted slightly lower earnings. Company’s stock price dropped just over 1% in Thursday’s trading to $41.51. Topper Philippe Dauman said that Viacom expects about half a billion dollars in digital revenue for the year.