Viacom Reports Higher Earnings Despite U.S. Network Declines

Domestic ad revenue down 3%
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Viacom reported higher second-quarter earnings as expenses declined but revenue fell at the company’s domestic cable networks.

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Net earnings rose to $266 million, or 66 cents a share, from $121 million, or 30 cents a share, a year ago.

Revenue fell 3% to $3.1 billion.

The earnings report did not comment on efforts to combine Viacom and CBS by the family of Sumner Redstone, which controls both companies.

At Viacom's media networks unit, revenue increased 1% to $2.43 billion, led by growth internationally that offset domestic declines.

Domestic advertising revenue continued to fall, decreasing 3% to $841 million.

Domestic affiliate revenue was down 4% to $934 million, primarily due to subscriber declines.

Ancillary revenue rose 30% to $168 million.

“Viacom continued to accelerate progress against its strategic priorities, delivering improvements across key metrics in the quarter,” said CEO Bob Bakish.

“Our flagship brands increased audience share among important demos for the fourth consecutive quarter, and we saw sequential improvements in domestic advertising and affiliate revenue performance," he added. "Internationally, Viacom continued its winning streak, achieving double-digit revenue and profit gains in the quarter while expanding its global footprint through new channel launches and innovative mobile distribution deals across Europe and Asia. Our cost transformation initiatives are well under way; we anticipate more than $100 million in cost savings in fiscal 2018, and now expect over $300 million in run-rate savings in fiscal 2019 and beyond."

Bakish also said Viacom was benefiting from the growth of virtual MVPDs and was showing revenue gains from advance marketing solutions and increased original content production through its Viacom Digital Studios unit.

“Looking forward, we see continued momentum as we pivot from stabilization and revitalization of our business to a new phase of growth,” Bakish said.

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