Viacom chief Bob Bakish took a short victory lap on Thursday during the company’s final quarterly earnings call before the completion of its merger with CBS Corp., which is expected to be sealed early next month.
Bakish talked up the return of Paramount Pictures to profitability for the first time in four years, and the return of Viacom to full domestic advertising revenue growth for the first time in six years. Given where Viacom was when Bakish took over in late 2016, both financial milestones are a win — or as Bakish put it, “evidence of our transformation.”
“We are really proud of Viacom’s evolution,” Bakish told analysts. “We couldn’t be more excited about what’s next.”
Viacom said net income in its fiscal fourth quarter dropped, even as the company saw improvements in some of its chief revenue lines, a sign of the challenges its operations continue to face even as it prepares to reunite with CBS Corp.
Viacom reported that net income for the quarter fell to $307 million, or 76 cents a share, compared with$394 million, or 98 cents a share, in the year-earlier quarter period. Excluding non-recurring items, adjusted earnings per share fell 79 cents from 99 cents. Revenue was off 1.5%, to about $3.43 billion from nearly $3.49 billion.
Revenue and earnings, however, surpassed Wall Street expectations.
Viacom said revenue in its filmed-entertainment division tumbled 14% in the period to about $851 million, citing difficult comparisons with the year-earlier period, which contained the latest film in the company’s “Mission: Impossible” franchise. Nonetheless, the improvement in Paramount’s performance — a big swing from losing nearly $500 million in fiscal 2017 — was lauded during the call.
Revenue from the company’s larger cable division rose 4% to more than $2.61 billion, largely on a 6% increase in revenue from distributors and a 1% increase in advertising.
Bakish and Viacom’s outgoing chief financial officer Wade Davis talked up the strategic and financial growth prospects of Pluto TV, the ad-supported streaming platform that Viacom acquired earlier this year. Bakish noted that Pluto TV has created a vast store of digital ad inventory for the company and more than $1 billion in domestic ad sales alone. He credited Pluto TV for driving much of Viacom’s 6% gain in advertising sales for the quarter.
Pluto TV has also “radically increased the number of clients we do business with — which is a very good thing,” Bakish said. Sales growth at Viacom’s Advanced Marketing Solutions unit offering cutting-edge advertising packages spiked 76% to $604 million.
Viacom has also steadily chopped away at its debt load, trimming it 13% year-over-year to $8.7 billion. The company generated free cash flow of $1.4 billion, down 16% from fiscal year 2018.
Cynthia Littleton contributed to this report.