Viacom said it would continue to press forward on new content ventures even as profit in its fiscal first quarter fell despite improved performance at its filmed-entertainment operations, and it grappled with a 6% decline in advertising revenue.
“Viacom today is a story of execution, and evolution,” said Bob Bakish, the company’s CEO, during a conference call with investors. Viacom has been under investor scrutiny for months as it grapples with the defection of younger audiences from traditional TV viewing. The company’s cable networks skew toward younger viewers, who have begun to adopt new technology like broadband streaming video more rapidly than older counterparts. Bakish put emphasis on a new slate of content being readied at Nickelodeon; new programming at MTV; and the company’s recent $340 million acquisition of streaming-video outlet Pluto TV,
The New York owner of MTV, Comedy Central and Nickelodeon said net income came to $321 million, or 80 cents a share, compared with $537 million, or $1.33 a share, in the year-earlier period. The company said it eked out a slight gain in revenue during the period, which came to $3.09 billion, compared with $3.07 billion a year ago.
Overall results beat Wall Street estimates, but the company’s revenue fell short of analysts’ targets. Viacom said performance at its cable networks had been crimped by unfavorable foreign-exchange impacts. Affiliate revenues rose, but advertising revenue fell 3% in the U.S. and 13% overseas.
The company’s filmed-entertainment operations provided a bright spot, with overall revenue increasing 14%. Viacom cited the performance of “Bumblebee” and “Instant Family” as factors in the improved results.
One analyst struck a skeptical tone about the results, noting that Viacom appeared to be using revenue from other areas of its business to augment its affiliate fee results. Viacom said it would reclassify certain parts of its business segmentation, said Todd Juenger of Bernstein Research, in a Tuesday research note. He also noted two charges in the results, a $71 million for restructuring and one totaling $77 million for a writedown of programming. ” The path to ‘growth’ by end of FY remains tough,” said Juenger.
A Viacom spokesman said the programming charge “resulted from new management decisions to cease use of certain programming.” Viacom has in recent months instilled new executives at its Nickelodeon and Paramount cable networks, and gave oversight of CMT to Chris McCarthy, the programming executive who oversees MTV, VH-1 and Logo.
Bakish said Nickelodeon had struck a content deal with Netflix that would result in the creation of two original animated films for the streaming-video service. The films will be based on Nickelodeon’s “The Loud House” series as well as its Teenage Mutant Ninja Turtles franchise.
He also indicated Viacom had bigger plans for Pluto TV, which he said “will unlock large library value for Viacom. As you know, we made the strategic decision two years ago to curtail the licensing of large library packages to SVOD with our streaming service in mind. As a result, we have lots of content to work with.”