Viacom reported a 3% drop in third-quarter revenue, with a 14% increase in operating income and a 24% rise in adjusted net earnings.
From Viacom's release: in the quarter ended Sept. 30, revenue dropped to $3.32 billion from $3.41 billion a year ago, primarily reflecting lower home entertainment and advertising sales, which more than offset increases in affiliate sales and theatrical revenues.
The gain in operating income in the quarter was driven primarily by an $88 million increase in the Filmed Entertainment segment. Adjusted net earnings from continuing operations attributable to Viacom were $421 million, up 24% over the third quarter 2008 results, with adjusted diluted earnings per share of $0.69, a 25% increase over the prior year's results.
CEO Philippe Dauman cited "ratings gains at several core networks and MTV delivered another record-setting Video Music Awards."
Media Networks revenue was essentially flat at $2.12 billion, with solid growth in affiliate sales offset by lower advertising and ancillary revenues. Worldwide affiliate revenues grew 10% in the quarter. Domestic advertising revenues were down 4%, which is a 2-percentage point sequential improvement over the second quarter 2009 results. Worldwide advertising revenues declined 5%.
Strong sales of The Beatles: Rock Band video game were offset by lower home entertainment and consumer products revenues, resulting in a 3% decrease in worldwide ancillary revenues. Filmed Entertainment revenues were down 6% year-over-year to $1.22 billion as weakness in home entertainment sales more than offset growth in theatrical revenues. Transformers: Revenge of the Fallen and G.I. Joe: The Rise of Cobra fueled a 16% increase in worldwide theatrical revenues. Worldwide home entertainment revenues decreased 21%, which primarily reflects a difficult comparison with the strong performance of the DVD release of Iron Man in the third quarter of 2008. Television license fees were down 8% in the quarter.
Third Quarter 2009 operating income increased 14% to $784 million compared with $689 million in the third quarter of 2008. This result was driven by the Filmed Entertainment segment which swung from a loss in the previous year to a $69 million profit in the third quarter of 2009, reflecting the strong performance of Transformers: Revenge of the Fallen and the positive impact of the 2008 restructuring and other cost-saving initiatives.
Media Networks operating income grew 2% to $773 million, reflecting continued growth in affiliate revenues as well as the benefits from the 2008 restructuring and other cost-saving initiatives.
Third Quarter 2009 adjusted net earnings from continuing operations attributable to Viacom increased $82 million, or 24%, to $421 million, principally due to higher operating income. Adjusted diluted earnings per share for the quarter were $0.69, a 25% increase over $0.55 in the third quarter of 2008. These results exclude the favorable impact of discrete tax benefits as well as an after-tax loss related to the extinguishment of debt in the quarter.