By Michael Calia and Keach Hagey
Viacom Inc. said its media networks and filmed entertainment
divisions propelled revenue growth in its most recent quarter.
The media conglomerate's top line fell below analysts'
expectations, but its profit narrowly beat them.
Viacom, whose cable properties include MTV and Nickelodeon, has
struggled with declining ratings, so it is seeking to boost the
percentage of advertising sales that don't depend on traditional
ratings from Nielsen.
Viacom's Nickelodeon group is planning to launch a
direct-to-consumer subscription service in March, Viacom CEO
Philippe Dauman announced during a call with analysts, promising
more details at the company's upfront presentation to advertisers
this spring.
"We believe this innovative service, which will have a distinct
brand and will target the fast-growing mobile market, will be very
attractive for parents and children," Mr. Dauman said.
The announcement comes on the heels of announcements of
direct-to-consumer subscription services from HBO and CBS in recent
months, aimed at the roughly 10 million broadband-only homes that
don't subscribe to pay television. The pay-TV bundle has begun to
fray at the edges in recent years as cord cutting and so-called
cord shaving--or slimming down to smaller, cheaper pay-TV
packages--has begun to shrink the reach of the biggest
channels.
The media networks division's revenue rose about 4% to $2.65
billion due to growth in affiliate fees and advertising revenue.
Domestic advertising revenue fell 6% as ratings fell, while
world-wide advertising revenues grew 3%.
The company's filmed entertainment division reported revenue
growth of 6% to $720 million as "Teenage Mutant Ninja Turtles"
continued to perform well, while "Interstellar" also benefited
Viacom's results.
Overall, the company reported earnings of $500 million, down
from $547 million a year earlier. Per-share earnings were flat at
$1.20, reflecting fewer shares outstanding in the period. Excluding
certain items, earnings were $1.29 a share.
Revenue improved 4.6% to $3.34 billion.
Analysts had projected per-share earnings of $1.28 and $3.41
billion in revenue.
Viacom has also sought to expand more overseas to mitigate the
effects of a crowded U.S. market. The company is in the process of
completing a deal with Reliance Industries Ltd. of India that will
give it 50% ownership of five entertainment channels in the
country.
The company earlier this month extended Dauman's contract
through 2018. The CEO, who has held the role since 2006, was paid
$44.3 million in the company's fiscal year ended Sept. 30, a 19%
raise over the prior year's figure.
Write to Michael Calia at michael.calia@wsj.com and Keach Hagey
at keach.hagey@wsj.com
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