Viacom said net income in its first fiscal quarter increased despite revenue shortfalls at both its film and TV operations, as the results of cost controls and the recent federal tax cut boosted its bottom line.
Viacom reported earnings from continuing operations of $535 million, or $1.33 a share, compared with $396 million, or $1 a share, in the year-earlier period.
The New York owner of MTV, Nickelodeon and the Paramount movie studio said revenue fell 7.6% to $3.07 billion, compared with $3.32 billion in the year-earlier period. The chief factor in the drop appears to be a reduction in the fees the company collects from U.S. cable and satellite distributors.
During a call with investors Thursday, Viacom executives projected narrowing losses in affiliate revenue and growth in advertising revenue later in the year. during the year. said Bob Bakish, Viacom’s CEO. “We do see a clear path” to organic growth, he said. Executives also suggested they were focusing more intently on broadband-delivered video, noting the company has a over-the-top product in the works they hope to launch in months to come and that the Nickelodeon favorite “Paw Patrol” would soon be made avaiable on Noggin, a subscription-video product Viacom offers that is primarily aimed at young viewers.
Viacom has charted a turnaround strategy, working to improve engagement with its many properties as digital media use erodes traditional TV viewership and moviegoing. Viacom said it expected advertising sales to continue to grow quarter over quarter, with a “return to growth” anticipated in its fourth quarter. The company also said better results at its film operations were “within sight” and that it was placing emphasis on its fiscal 2019 slate. Viacom’s board has formed a committee to explore a potential merger with CBS. During a call with investors on Thursday, Viacom said it would not comment further on that effort.
The company faced headwinds in its two chief lines of business, cable television and filmed entertainment.
Viacom’s cable-TV networks saw operating income fall 7%, to $913 million. Ad revenue rose 1% to $1.31 billion, but revenue from affiliate fees dipped 4%, to $1.09 billion. U.S. ad revenue fell 5%, owing to lower linear viewership. The company recently launched the Paramount Network, a cable-TV operation designed to feature high-end series and movies. MTV, Viacom’s flagship network, saw ratings increase.
Viacom’s filmed-entertainment operations saw its operating losses narrow to $130 million from $180 million. Overall revenue fell 28% to $544 million. Viacom has been working to turn around its Paramount operations under a new management team.
The company has also been working to diversity its holdings, acquiring the VidCon conference and the WhoSay influencer marketing agency.
Bakish declined to offer specifics on Cyma Zarghami’s status at Nickelodeon. The company recently gave Sarah Levy, an executive who oversees business development, research and several other functions across the company’s cable networks, oversight of those things at BET and Nickelodeon, prompting some speculation about longtime Nickelodeon leader Zarghani, whose contract is said to be nearing the end of its term. “There has been no change in leadership at Nickelodeon,” he said.