Viacom Q3: Encouraging Results

| About: Viacom Inc. (VIA)

Viacom Inc. (NYSE:VIA) Tuesday declared encouraging results for the third quarter. Quarterly net income from continuing operation was $443 million or 73 cents per share, compared to $385 million or 62 cents per share in the prior-year quarter. However, third-quarter adjusted (excluding one-time discrete tax benefit) EPS was 61 cents significantly above the Zacks Consensus Estimate of 55 cents. This is mainly due to soaring increase in operating profit and effective cost management. Quarterly revenues of $3.32 billion was down 3% year over year but was in line with the Zacks Consensus Estimate.

Operating income was $784 million, up 14% year over year driven by the solid performance of the Filmed Entertainment segment. At the end of the reported quarter, Viacom had $249 million of cash & cash equivalent and $6,852 million of outstanding debt on its balance sheet compared to $792 million of cash & cash equivalent and $8002 million of outstanding debt at the end of the prior-year quarter.

Media Networks Segment

Revenues of $2,124 million were essentially flat year over year. Within this segment, solid growth in affiliate sales was offset by lower advertising and ancillary revenues. Worldwide affiliate revenues grew 10% in the reported quarter. Domestic advertising revenues were down 4% year over year, but marked an improvement of 2% sequentially. Worldwide advertising revenues declined 5%. Strong sales of the video game “The Beatles: Rock Band” were offset by lower home entertainment and consumer products revenues, resulting in a 3% decrease in worldwide ancillary revenues. Quarterly operating profit was $773 million, up 2% year-over-year.

Filmed Entertainment Segment

Revenues of $1,224 were down 6% year over year. Ongoing weakness in home entertainment sales more than offset solid growth in theatrical revenues. “Transformers: Revenge of the Fallen” and “G.I. Joe: The Rise of Cobra” resulted in 16% year-over-year increase in worldwide theatrical revenues. However, worldwide home entertainment revenues decreased 21% year over year. Television license fees were also down 8% year over year. In the reported quarter, this segment swung from a loss in the prior-year quarter to a $69 million operating profit.