Tuesday, media major Viacom Inc. (VIA, VIA-B), reported a 15% rise in profit for the third quarter, predominantly helped by strong sales of Medof Transformers and GI Joe and revenues from its Media Networks, notwithstanding a 3% drop in revenues from last year. Both earnings and revenues came in well ahead of Street estimates for the quarter.
The New York-based company reported third-quarter net earnings from continuing operations attributable to Viacom of $443 million, compared to $385 million in the year ago quarter. On a per share basis, earnings increased 18% to $0.73 from $0.62 last year.
On an adjusted basis, net earnings from continuing operations attributable to Viacom were $421 million, up 24% from $339 million, while on a per share basis, adjusted earnings rose 25% to $0.69 from $0.55 in the year ago quarter. These results exclude the favorable impact of discrete tax benefits as well as an after-tax loss related to the extinguishment of debt in the quarter.
On average, 25 analysts polled by Thomson Reuters expected the company to earn $0.57 per share for the quarter. Analysts' estimates typically exclude one-time charges and gains.
For the preceding second quarter, the owner of MTV Networks and Paramount Pictures reported a sharp decline in its profit as top line dropped 14% from last year, mainly due to lower advertising revenues and lower theatrical and home entertainment revenues. Net earnings attributable to the company were $277 million or $0.46 per share, compared to $407 million or $0.65 per share a year ago.
Revenues for the third quarter were $3.32 billion, down 3% from $3.41 billion in the comparable quarter last year, primarily reflecting lower home entertainment and advertising sales, which more than offset increases in affiliate sales and theatrical revenues. Analysts expected the company to report revenue of $3.30 billion for the quarter.
Revenues for the sequentially preceding quarter declined to $3.30 billion from $3.86 billion in the prior-year quarter.
Segment wise, Media Networks revenues for the recent third quarter were essentially flat at $2.12 billion, with solid growth in affiliate sales offset by lower advertising and ancillary revenues. Worldwide affiliate revenues grew 10% in the quarter. Domestic advertising revenues were down 4%, which is a 2-percentage point sequential improvement over the second quarter 2009 results. Worldwide advertising revenues declined 5%.
Filmed Entertainment revenues for the quarter were down 6% year-over-year to $1.22 billion as weakness in home entertainment sales more than offset growth in theatrical revenues. Worldwide home entertainment revenues decreased 21%, which primarily reflects a difficult comparison with the strong performance of the DVD release of Iron Man in the third quarter of 2008. Television license fees were down 8% in the quarter.
Operating income for the quarter increased 14% to $784 million from $689 million in the year earlier quarter, driven by the Filmed Entertainment segment which swung from a loss in the previous year to a $69 million profit in the quarter, reflecting the strong performance of Transformers: Revenge of the Fallen and the positive impact of the 2008 restructuring and other cost-saving initiatives. Media Networks operating income grew 2% year-over-year to $773 million from last year, reflecting continued growth in affiliate revenues as well as the benefits from the 2008 restructuring and other cost-saving initiatives.
Sumner Redstone, Executive Chairman of Viacom, said, "As we enter a period of economic recovery, Viacom is already beginning to reap the benefits of a highly focused and well executed strategy. With our strong brands and growing global footprint, we are well positioned to capitalize on future opportunities."
At September 30, 2009, total debt outstanding, including capital lease obligations, decreased to $6.85 billion, compared to $8.00 billion at December 31, 2008.
For the nine-month period, net earnings from continuing operations attributable to Viacom declined to $897 million or $1.48 per share from $1.06 billion or $1.68 per share in the same period last year. Adjusted net earnings from continuing operations attributable to Viacom decreased to $896 million or $1.47 per share from $1.03 billion or $1.63 per share last year.
Revenues for nine months dropped 8% to $9.52 billion from $10.38 billion in the corresponding period last year.
Amongst others in the sector, Time Warner Inc. (TWX) is slated to announce its third-quarter results on November 4. Analysts are of the view that the company will earn $0.53 per share on revenues of $7.08 billion.
Another peer, Burbank, California-based diversified media and entertainment company Walt Disney Co. (DIS) is scheduled to announce its fourth-quarter results on November 12. Street analysts forecast a profit of $0.40 per share with revenue estimate of $9.26 billion.
VIA is currently trading at $29.58, down $0.15 or 0.50%, on a volume of 0.19 million shares on the NYSE. In the past 52 weeks, the stock trended in a broad range of $13.00 - $31.42, with a three-month average volume of 88,196.9 shares.
VIA-B is currently trading at $28.02, down $0.03 or 0.11%, on a volume of 2.18 million shares on the NYSE. In the past 52 weeks, the stock trended in a broad range of $11.60 - $29.85, with a three-month average volume of 3.89 million shares.
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