UPDATE, 8:50 AM: Listen up Occupy Wall Streeters: Viacom CEO Philippe Dauman told analysts that the company is doing better than ever financially – yet is still cutting jobs. It reported a $130M restructuring charge in the fiscal 4Q — $77M coming from the Media Networks and $53M from Filmed Entertainment. That will mostly go toward severance payments over the next year. Viacom expects to benefit from $140M in annual savings, improving profit margins even if the economy weakens, COO Tom Dooley says. Company SEC filings indicate that the Viacom cut 320 positions over the last year, ending with 10,580 full and part time employees in September. Most of the cuts took place overseas. Dauman says that in late October the company announced that it will hire 100 people for accounting, finance and corporate support at cable channel CMT’s headquarters in Tennessee, which means Viacom is “able to bring jobs onshore.”
Dauman cited two problems that worry some investors: He cited economic “headwinds” hurting ad sales — although he quickly added that Viacom can make up for any problems with additional revenues from rising fees that cable and satellite companies pay. Also, he said that Nickelodeon lost ad sales, especially from toy companies, beginning in September when Nielsen ‘inexplicably” reported unusually weak ratings. Although Dauman offered few details, Morgan Stanley’s Benjamin Swinburne says he believes live-only ratings in Nick’s key demos fell 9% in September and 15% in October. Dauman says that data from set-top boxes indicate that it’s an “aberration” with Nielsen’s measurement process, not Nickelodeon. Still, it forced the channel to offer make-goods that can’t be recouped.
Viacom’s share price dropped during the call, but recovered afterward. It’s up about 4% in mid-day trading.
PREVIOUS: 4:06 AM: The Sumner Redstone-controlled entertainment giant says it will buy back $10B worth of its shares, up from $4B — which is sure to make investors happy. But they’ll also like the fiscal 4Q results: Viacom’s continuing operations had net earnings of $583M, up 19% from the period last year, on revenues of $4.05B, up 21.7%. Analysts thought revenues would come in at $3.75B. And earnings from continuing operations, at $1.06 a share, exceeded forecasts for $1.03. Paramount’s filmed entertainment unit was the star with revenues up 46% to $1.8B. The company says that was mostly due to the strong box office sales for Transformers: Dark Of The Moon.
The media networks — the largest operation with cable channels such as MTV, Comedy Central, and Nickelodeon — were up 8% to $2.3B. Ad sales were up 7% while rate increases boosted affiliate fees 11% to $883M. “Our financial position is as strong as it has ever been, which allows us to continue to invest in the growth of our businesses, including new branded television networks in the U.S. and internationally, and Paramount’s recently launched animation label,” CEO Philippe Dauman says. The studio is “benefiting from a disciplined franchise-centric approach that has produced an unprecedented number of hits,” he adds, while the new stock repurchase effort shows “our confidence in Viacom’s long-term outlook.” The company spent $2.5B in the latest fiscal year buying back 19.7M shares, and has $7.2B left in its newly raised $10B authorization. Redstone says that the financial results illustrate “the value of our focused strategy and strong leadership.”