Viacom profits up by 80% due to cable ads, movie Transformers

5 November 2007:

Viacom Incorporated, owner of MTV and the Paramount film studio, has achieved a whopping 80% increase in third-quarter profits.

The feat has been possible mainly on account of the earnings from the robot movie Transformers and the sale of a music-publishing business, according to a statement from the company.

Viacom reported a quarterly net income of $641.6 million – or, 96 cents a share – compared with $356.8 million – or, 50 cents – in the same period a year earlier.

The company’s earnings from continuing operations jumped by 27% to $450 million – which means 65 cents a share after excluding tax and restructuring adjustments of 2 cents a share.

The statement from the media conglomerate, based in New York, the United States, said that the $192-million gains on the sale of Famous Music to Sony Corporation helped boost the profits.

In the third-quarter, revenue rose by 24% to $3.27 billion, and operating income soared by 25% to $815 million.

The media networks accounted for 60% of Viacom’s $3.2 billion in revenue and over 92% of its operating income.

It may be noted that the revenue and earnings have surpassed the estimates of the Wall Street analysts.

Meanwhile, Viacom also said that if the Writers Guild of America strike happens, it may affect a few programs.

Philippe P Dauman, CEO of Viacom, told reporters that Comedy Central’s The Daily Show With Jon Stewart and The Colbert Report – two of Viacom’s top cable TV programs – were especially vulnerable to a planned strike by the writers because of their “topical nature.”

The Daily Show With Jon Stewart and The Colbert Report, the two mock news shows highly popular with young adults, employ about a dozen writers each, according to a spokesman of Comedy Central.

Apart from the threat of strike, Viacom is fairly sitting pretty, Philippe P Dauman told the media. Viacom’s Paramount Pictures, like other movie studios, has been preparing for a strike and has “a good pipeline of movies that are already produced or in production which will not be affected,” Dauman added.

He said the other cable TV channels of Viacom mainly depended on shows with fairly long lead times that are already completed or on unscripted shows, like MTV’s reality soap opera The Hills and Spike TV’s The Ultimate Fighter.

On the spectacular results of the third-quarter, Philippe P Dauman remarked that Transformers enjoyed phenomenal success in cinemas worldwide and in retail sales of its DVD released recently.

Viacom’s home-video division gained from sales of earlier hits such as Disturbia. According to industry analysts, the home-video division looks well set to benefit from Indiana Jones and Star Trek to be released in 2008.

Viacom’s filmed entertainment division recorded an operating profit of $71.7 million, in contrast to a $7.8-million loss in the quarter a year earlier, reflecting Viacom’s acquisition of the DreamWorks SKG studio in 2006, the statement said.

The media networks division, including MTV, Comedy Central and Nickelodeon, earned an operating profit of $796.8 million – a 2% increase from the $777.7-million profit of 2006.