Viacom's third-quarter earnings took a hit as the company announced plans to sell the division that produced the disappointing video game "Rock Band."
Net earnings were $189 million or 31 cents a share , down from $463 million, or 76 cents a share, down from $463 million, or 76 cents a share, a year ago. The result includes a $299 million loss from discontinued operations including the Harmonix video game unit. Rock Band was seen as an opportunity for Viacom to get itself into a hot new business, but the company failed to generate the profits it was hoping for.
Net earnings from continuing operations rose 7% to $461 million.
Revenues rose 5% to $3.3 billion.
During the company's earnings conference call with analysts, Viacom president and CEO Philippe Dauman said that the company was selling Harmonix to "focus entirely on what we do best."
Harmonix lost $65 million during the quarter. Viacom also took an impairment charge of $230 million on Harmonix good will and a $30 million pre-tax write down of Rock Band assets.
Viacom's Media Networks group, which includes MTV, Nickelodeon and Comedy Central, had operating income of $873 million, up 9% from a year ago. Revenues were up 8% to $2.1 billion
Domestic ad revenue rose 8%, a bigger gain than in the prior quarter, thanks to a strong scatter market. But ad growth was slower than at the cable networks owned by Discovery Communications and Scripps Networks. Dauman said after a good upfront and with the scatter market staying strong, Viacom was expecting the growth rate for domestic ad revenue to increase sequentially again next quarter.
Viacom expects its programming expenses to grow at a high single-digit rate in 2011. Dauman noted that 91% of what Viacom's major networks spend on programming goes for original programming.