Viacom Q3 Ad Revenue Falls 4%, Decline Slowing

Severance charges at MTV Networks total $16 million

By Claire Atkinson -- Broadcasting & Cable, 11/3/2009 10:14:52 AM

Domestic ad revenue fell 4% at Viacom in the third quarter 2009, that figure is a 2% improvement on the 6% ad revenue decline in the second quarter. Separately, worldwide ad revenue fell 5%. MTV Networks has held back inventory for the scatter market which is expected to provide improved opportunities for generating revenue than the tough upfront market which concluded at the end of August.

A rise in affiliate revenue helped Viacom's Media Networks division offset the ad revenue declines. The unit, which houses BET to MTV, saw a 2% uptick in operating income to $773 million, up from $761 million in the prior year period. For the nine months it fell 6%.

Media Networks revenue for the quarter was $2.1 billion, flat for the period. In the first nine months, Media Networks revenue fell 5%. Severance charges at MTV Networks totaled $16 million through Sept. 30. The company's highest profile departure was programming chief Brian Graden, who stepped down earlier this year. At Filmed Entertainment severance charges were $17 million.

Overall, Viacom's revenue fell 3% to $3.32 billion on fewer ad dollars and a shrinking home entertainment market. Viacom saw an increase in affiliate revenue and a better performance from its theatrical unit during the period. The company also reported a 14% increase in operating income to $784 million; that was largely due to an $88 million increase in the filmed entertainment unit. Viacom's adjusted net earnings from continuing operations were up 24% to $421 million. The revenue figure beat analyst's consensus estimates.

Analyst Ben Mogli wrote in a note this morning that both media and film performed better than expected but the turn was largely at the film unit. Mogli noted the lack of comment on TV ratings at core networks including MTV.

In a prepared statement released today, Nov. 3, President and CEO Philippe Dauman said: "We continued to take a number of actions to strengthen our financial position, tighten our operations and improve execution across our businesses. A stronger programming slate drove ratings gains at several core networks and MTV delivered another record setting Video Music Awards."