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)

Copyright (c) 2018 Dow Jones & Company, Inc.
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