Published November 10, 2011
Viacom Inc's quarterly revenue and profit rose, beating estimates, due mainly to the success of the Paramount film ``Transformers: Dark of the Moon''.
Viacom, the company behind MTV and Paramount Pictures, also announced Thursday that it expanded its stock repurchase program to $10 billion from $4 billion and said it expects to complete the buyback in two years.
Total revenue for the quarter ending in September increased 22 percent to $4 billion, ahead of analysts' average forecast of $3.75 billion, according to Thomson Reuters I/B/E/S.
Shares of Viacom were up 1.1 percent at $40.74 on Thursday morning.
While Viacom reported a jump in revenue, its advertising revenue growth -- something that has been closely watched by analysts -- weakened from quarter to quarter.
Signs are emerging that concerns about an economic rout including stagnant job growth are spooking consumers. In uncertain times advertisers slash budgets.
Advertising revenue at Viacom's cable networks, which includes MTV, Comedy Central and Nickelodeon, rose 7 percent both in the United States and worldwide, during the fiscal fourth quarter.
That is down from third quarter, when the company reported a 14 percent increase in worldwide ad revenue, and a 12 percent increase in the United States.
``It is a concern. Everyone is laser focused (on advertising),'' said David Joyce, an analyst at Miller Tabak & Co, who forecast Viacom's ad revenue to rise 8.7 percent.
Viacom Chief Executive Philippe Dauman said during a call with analysts that the setback in ad growth had to do in part with a ratings decline at Nickelodeon and more widely at some of its networks that show reruns.
Dauman disclosed that Viacom is working with Nielsen Holding, the dominant firm that provides TV ratings used to set ad rates, to hash out an ``inexplicable'' drop in Nickelodeon ratings during a period in September. That is a key month for back to school and pre-holiday advertising -- important categories for the network behind SpongeBob SquarePants.
``Let's just say we wouldn't have had any conversation based on the set top box data,'' Dauman said about the difference in the numbers Viacom tracked.
He also cited softness in volume in the scatter market or commercial time that is bought at the last minute.
``There's more to it than just ratings calculation issue at Nielsen. It's a head-scratcher a little bit of what's going on,'' said Robin Diedrich, an analyst with Edward Jones.
Still, she said that advertising revenue otherwise was ''solid.''
It was Viacom's filmed entertainment unit Paramount Pictures, where revenue increased 46 percent to $1.79 billion, that helped push the numbers up.
Revenue at its cable networks grew 8 percent to $2.3 billion.
Viacom said that for the fiscal year that ended in September, it had repurchased 55.7 million shares for an aggregate price of $2.5 billion. It had $7.2 billion remaining in its buyback program as of Nov. 9.
Excluding special items, the company posted earnings per share of $1.06, beating analysts' estimates of $1.02. (Reporting by Jennifer Saba; Editing by Derek Caney, Maureen Bavdek and Matthew Lewis)