Viacom's TV Business Continues to Suffer From Cord Cutting
09 February 2018 - 1:02AM
Dow Jones News
By Austen Hufford
Viacom Inc. reported a deeper-than-expected revenue decline in
its latest quarter as its television networks in the U.S. saw less
advertising and subscription revenue.
The decline comes as investors have also been watching a
potential merger between Viacom and CBS Corp. Last week the
companies disclosed that their boards had formed a special
committee to evaluate a potential merger, a deal that would reunite
two big pieces of the Redstone family's media empire.
Shares in Viacom, which owns networks including MTV, Comedy
Central and Nickelodeon, fell 3.3% in premarket trading
Thursday.
Viacom, like other linear-television channel providers, is hurt
when viewers cut their cable subscriptions from both lower
advertising payments and a decline in affiliate revenue generated
through subscription fees paid to cable companies.
In its first quarter, Viacom said U.S. advertising revenue
decreased 5% to $937 million, due to lower linear impressions.
Higher rates and growth in digital advertising revenue didn't
offset the declines. Domestic affiliate revenue decreased 8% to
$907 million due to subscriber declines and lower subscription
video-on-demand revenue, which was partially offset by rate
increases.
Revenue in its movie division decreased 28% to $544 million in
the quarter, as U.S. revenue fell 42% to $270 million and
international revenue declined 6% to $274 million. The unit saw
declines in theatrical, licensing and home entertainment
revenue.
The company also said it had made progress on cost cuts and was
on-track to achieve $100 million in new cost savings this year and
"hundreds of millions more" in 2019.
The company said profit was boosted by the enactment of the new
tax law.
For its first quarter, Viacom reported a profit of $537 million,
or $1.33 a share, up from $396 million, or $1 a share, a year
earlier. Excluding the tax benefit and other charges, Viacom posted
an adjusted profit of $1.03 a share, down a penny from the prior
year. Analysts polled by Thomson Reuters expected Viacom to earn a
profit of 94 cents a share.
Revenue fell 7.6% to $3.07 billion, below analysts' estimates of
$3.14 billion.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
February 08, 2018 08:47 ET (13:47 GMT)
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