Viacom’s Film Growth & Increased Advertising Help Media Giant Beat Wall Street Estimates For Q3 As CBS Merger Talks Continue

By Dade Hayes, Peter White

Mark Lennihan/Shuttstock

As the drumbeat grew louder for a long-awaited merger with CBS, Viacom reported third-quarter earnings that beat market expectations.

Earnings per share came in at $1.20 on Thursday, beating the consensus estimate from analysts of $1.07, while revenue of $3.36 billion beat the estimate of $3.33B.

Domestic advertising grew for the first time in five years, increasing by 6% over the prior-year quarter to $976 million. That’s a major milestone for the once-beleaguered company, whose deteriorating ad picture defined the latter years of Philippe Dauman’s tenure as CEO. Bob Bakish succeeded him in 2016.

Despite the uptick in advertising, Media Networks managed to increase revenue by just 1%, to $2 billion, as international and consumer products lagged.

Growth at Paramount Pictures, with operating income increasing $41M year-on-year, also helped the results as its TV production engine continued to hum. Theatrical films including Rocketman and the modestly budgeted Crawl were standouts in the period. Paramount TV continues to grow with 26 shows ordered or in production, including Shantaram for Apple, Made for Love and Station Eleven for HBO Max, When the Street Lights Go On for Quibi and Sexy Beast for Paramount Network.

In terms of cable networks, Comedy Central recorded its ninth straight quarter of share growth, while Paramount Network grew its share for the third straight quarter.

“Viacom delivered another strong quarter, as our core businesses and investments in strategic priorities fuel our growth and evolution,” Bakish said. “Importantly, we returned Domestic Advertising Revenue to growth, which is a direct result of the strategy we have been executing for the last two years and the significant progress we have made in scaling Advanced Marketing Solutions. Paramount’s momentum also continues, keeping us on track to deliver full-year profitability.”

CBS, meanwhile, will report its own quarterly earnings after the close of trading on Wall Street on Thursday. Speculation had mounted about a merger announcement being timed to the companies’ joint earnings day, but sources have told Deadline that’s not the likely plan. Talks, while more constructive than the last two formal rounds, are continuing as parties work through exchange-ratio perspectives and finalize the management structure. Instead of any reunification conference call, the traditional combination of financial reports and conference calls with analysts will take place, per usual.

Bakish, who is expected to lead the combined company, has presided over a genuine comeback at Viacom, though the story is not without a few blemishes.

Paramount, while back off the mat after some rough years earlier this decade, is in sixth place in U.S. theatrical market share and will release just 10 films this year. Key Viacom cable brands like Nickelodeon and MTV have shown signs of life recently, but are still operating in a challenging environment given the erosion in viewership of traditional television.

Under Bakish, the pace of dealmaking has increased, with Viacom acquiring Pluto TV, Awesomeness and Vidcon in just the past year-plus.

This article was printed from https://deadline.com/2019/08/viacom-q2-earnings-3-beat-wall-street-estimates-1202663934/