Viacom Inc. touted its turnaround story Thursday but delivered fiscal third-quarter earnings that exposed the challenges of consumer cord-cutting — and just how much work the company must do to right the ship, reports The LATimes.
For the quarter ended June 30, revenue declined nearly 4% to $3.2 billion for the media company, which owns the Paramount Pictures film studio in Los Angeles and cable channels Nickelodeon, MTV, Comedy Central, TV Land and BET.
Viacom’s critically important pay-TV fee revenue declined because the New York-based company has struggled to persuade major pay-TV operators, including Charter Communications, to pay substantially higher fees for its channels. Affiliate fee revenue from those operators fell 3% worldwide to $1.15 billion, which was short of analyst estimates of $1.16 billion.
Among the cable TV networks, revenue declined 2% to $2.5 billion. Advertising revenue was down 4% worldwide to $1.2 billion as ratings for several of the TV networks remain challenged. Adjusted operating income for the TV channels declined 8% to $799 million in the quarter.
Overall, net income attributable to Viacom dropped to $522 million, or $1.29 per share, in the fiscal third quarter, from $683 million, or $1.70 per share, in the year-earlier period. The year-earlier period included a gain from the sale of Viacom’s interest in premium movie channel Epix.
Nonetheless, its earning topped consensus estimates of $1.07 a share, according to data from FactSet. Viacom shares jumped more than 5% in early morning trading, briefly topping $30 a share.
“There are a lot of positives going on here,” Viacom Chief Executive Bob Bakish said in a conference call with analysts. “The Viacom turnaround is delivering demonstrable and measurable results. We are quickly evolving into much more than a U.S. based pay-TV company.”