The owner of MTV Networks and Paramount Pictures said Q-1 profit rose 38% because of reduced operating expenses and improved cable TV ratings. Overall, Viacom revenues were down -4%, as growth in affiliate and advertising revenues was more than offset by lower feature film revenues primarily due to a 34% decline in home entertainment revenues. (This decrease principally reflected the fact that Q-1 2010 had no comparable title to DreamWorks Animation’s Madagascar: Escape 2 Africa DVD release this time last year.) Theatrical revenues declined 6%, primarily due to lower year-over-year revenues from films originally released in the 4th Quarter, which were partially offset by the strong performance of the 2010 release of Shutter Island. (The studio didn’t make enough movies in Q-1 — only 3 instead of last year’s 6. “It was impacted by the studio division’s strategic move of fewer releases,” Dauman shorthanded it.) A 16% decrease in television license fees reflected the number and mix of available titles.
President/CEO Phillippe Dauman on the conference call said advertising moved into positive territory — finally — and is on the upswing. Domestic ad revenue was up 1% and worldwide ads up 3%. But the biggest announcement was that Viacom was working with its board over the next 3 months to return cash to shareholders — either instituting a shares buyback or initiating a dividend.
Viacom boss Sumner Redstone said, “Viacom is off to an excellent start this year, delivering a strong performance, including outstanding bottom-line results” and forsaw an even better long-term outlook. Dauman said Viacom’s “focus on reinvigorating MTV’s ratings” generated results this quarter with the network not only delivering its highest rated quarter in nearly 2 years, but also 5 of the top 15 original cable series in its target demographic. He said Nickelodeon and BET also continued to grow their audiences.
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