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Viacom profits jump 53%

Revenues soar on strong film, TV returns

Justin Bieber’s concert doc and MTV’s Snooki helped drive Viacom’s financial results for the quarter ended March 31.

CEO Philippe Dauman, reporting fiscal second-quarter results Thursday, said revenues grew 20% to $3.3 billion, with profits up 53% to $376 million.

“Every part of Viacom is in great shape,” he declared.

Highlights from the quarter included an MTV audience boost of 25%, the network’s biggest gain in five years, helped by the success of shows like “Jersey Shore,” “Teen Mom 2” and “Real World Las Vegas.” Revenues overall at Viacom’s media nets grew 11% to $2.1 billion. Domestic advertising was up 11% in the quarter, with Dauman predicting continued strength through the upcoming upfront season. Strong categories included movies, autos, insurance and toys.Viacom’s film biz recovered nicely, too, after being hurt by weak DVD sales in the previous quarter. Revenues were up 38% in the quarter to $1.2 billion, helped by movies “No Strings Attached,” “Justin Bieber: Never Say Never” and “Rango.” Carryover films from 2010 “True Grit,” “Little Fockers” and “The Fighter” continued to drive results in the quarter. Home entertainment revenue grew 38% to $410 million, largely because the division released nine films on DVD in the quarter vs. just one in the year-earlier period. Dauman said Viacom anticipates strong results from upcoming theatrical releases, such as Marvel’s “Thor,” J.J. Abrams’ “Super 8” and DreamWorks Animation’s “Kung Fu Panda 2.”

Viacom bought back $500 million in stock in the quarter, $100 million more than was earmarked, and said it plans to repurchase another $700 million in the current quarter.

When asked if more of the company’s free cash flow could be used for acquisitions, Dauman said Viacom is focused on organic growth, especially in terms of launching new channels in India.

Chief operating officer Tom Dooley said revenues from its agreements with Netflix and Hulu are not “significant” enough so far to break out, but that could change in the coming quarters. Dauman said Viacom would look to strike more broadband deals to stream its programming, particularly outside the U.S.

Wall Street continued to be bullish on Viacom’s future prospects.

“Given the company’s continued ratings strength and a continuing rebound in the ad economy, we believe there is still upside for the stock with further multiple expansion and higher earnings revisions ahead,” said analyst Michael Nathanson at Nomura Securities. “We would expect consensus earnings to rise after today’s earnings release and remain confident that ad growth will remain in the double digits into next quarter.”

Standard & Poor’s analyst Tuna Amobi upped his rating on Viacom’s B shares to “strong buy,” saying the company “increasingly rides a palpable creative resurgence across its core networks and Paramount studio.”

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