Viacom has some encouraging news in the financial report it just released for the March quarter — but we’ll have to see whether there’s enough in the right places to overcome the market’s concerns about weakening prospects for pay TV, which sent the company’s shares down 7.5% yesterday.

They’re up 0.6% in early pre-market trading this morning.

Notably, Viacom says that domestic ad sales at its networks fell 4% vs the period last year with its higher prices “more than offset by lower impressions.”

Net earnings for the first three months of this year, at $121 million, were down 60.1% vs the period in 2015 on revenues of $3.26 billion, up 8.5%. Analysts were looking for $3.03 billion on the top line.

Adjusted earnings at 79 cents a share also topped expectations of 59 cents.


CEO Bob Bakish lauded the “continued top-line improvement, with growth in affiliate revenues, international media networks and across every business segment of Paramount Pictures. Additionally, we executed quickly on our strategic plan, making significant organizational changes to better focus and align Viacom’s brand portfolio and ensure strong leadership, including the appointment of Jim Gianopulos to chart a new course at Paramount. We are working diligently to cement Viacom as a partner of choice in the industry, presenting new and reinvigorated brand strategies for our advertisers, producing creative and flexible new opportunities with our distributors and recommitting ourselves to be the home for the world’s best talent.”

He adds that there’s “a lot of work still to do, but we are making important changes at Viacom, taking substantial strides towards revitalizing our portfolio of brands and returning the company to consistent top-line growth.”

At the main Media Networks business, operating income fell 43% to $332 million with revenues up 8% to $3.26 billion. Most of the growth came from overseas where revenues were up 11% — mostly due to the acquisition of Argentina’s Telefe —   and would have been +18% had currencies not weakened vs the U.S. dollar.

Affiliate revenues were up 2%, with U.S. +1% and overseas +10%. The domestic figures reflects price increases “partially offset by a modest decline in subscribers and a decline in revenues from SVOD and other OTT agreements,” Viacom says.

The drop in U.S. ad sales offset the 1% increase overseas, netting a 1% drop for the company.

Viacom says Paramount’s Filmed Entertainment unit saw a 37% revenue bump to $895 million with an adjusted operating loss of $66 million, an improvement from last year’s $136 million loss.


Theatrical sales improved 10% to $238 — although domestic was down 45% while international was up 98% reflecting “the strong international performance of xXx: Return of Xander Cage.

Licensing improved 45% to $347 million from TV deals with pay television and SVOD distributors. Home entertainment was up 29% to $198 million.

Viacom’s debt  — an investor concern — was up 2.4% since the end of the last fiscal year in September to $12.19 billion. The company says it “continued to implement its plan to strengthen its balance sheet, reduce leverage and enhance liquidity, issuing $1.3 billion of hybrid securities, redeeming $1.4 billion of senior notes, and executing on the sale of non-core assets, including the pending sale of our stake in Epix.”