Revenues flat: Ads up, DVDs down

Viacom boosted profits by 40% in the past quarter to $418 million, but on the revenue front, gains in advertising were offset by weaker DVD sales. The result: Viacom’s revenues remained flat at $3.3 billion, executives reported Thursday.

DVD revs fell a steep 43% in the quarter, mostly because of fewer releases and lower sales from Paramount’s catalog, said Viacom CEO Philippe Dauman. That drove down overall film revenues for Viacom by 10% to $1.25 billion.

A bright spot: strong performances at the worldwide box office by Par and Marvel Studio’s “Iron Man 2″ and Par and DreamWorks Animation’s “Shrek Forever After,” which helped lift theatrical revenues by 10% in the quarter.

The homevid market remained soft, coupled with the fact that Paramount’s home entertainment division had three fewer DVD releases than during the same quarter last year.

Ad revs within the Viacom empire during the quarter were up 4% in the U.S, and 4% internationally, when adjusted for currency changes.

“We are not all the way back,” said Viacom chairman Sumner Redstone, “but the horizon is brighter than it has been in a long time.”

Viacom sold 50% of its upfront inventory, said Dauman, at higher single-digit rates than during the previous year period. He also pointed out that it drew new advertisers to some of its networks. At Nickelodeon, for example, new auto and insurance advertisers signed on, suggesting marketers believe parents are watching the net’s shows with their kids, Dauman said.

When asked if some of Viacom’s more controversial shows, like “Teen Mom” and “Jersey Shore,” tended to frighten off advertisers, Dauman said they quite the opposite has occurred. “They are scrambling” to get on these shows, he said.

Dauman said Par’s deal to make DVDs available to kiosk retailer Redbox on the same day that they go on sale to the public — vs. 28 days after the DVD release date — has had “minimal impact” on sales, and that Redbox pays a higher fee to Viacom in order to get the titles early.

At Paramount, the studio’s mandate to release fewer movies theatrically and on DVD led to a 15% decline in expenses, which helped total Viacom expenses dip 6% to $173 million.

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