Viacom reported higher profits in its fiscal second quarter despite a sharp decline in its movie business.
Net earnings rose to 5% $502 million, or $1.13 a share in the quarter, from $478 million, or 96 cents a share.
Revenues were up 1% to $3.174 billion.
"Viacom posted another strong quarter, resulting from our relentless focus on developing quality creative content and delivering it around the world in innovative ways,” CEO Philippe Dauman (pictured) said in a statement. “Our Media Networks remain in high demand, commanding a premium position with advertisers and achieving significant continued growth with both traditional and emerging distribution partners.”
Viacom also said it agreed to acquire British broadcaster Channel 5 for $757 million dollars. During the company’s earnings conference call with analysts, Dauman said he expects the acquisition to be accretive to earnings in the first year. Viacom plans to add original programming to the channel and said it will compliment its cable networks in the market.
Viacom’s Media Networks unit, which includes Nickelodeon, MTV and Comedy Central, posted a 9% increase in operating income to $949 million in the quarter.
Media Networks’ revenues were up 6% to $2.375 billion. Domestic affiliate revenues were up 11% because of rate increases. Worldwide affiliate revenues were up 10%.
Domestic ad revenues were up 2% and worldwide ad revenues increased 3% to $1.12 billion.
Dauman said he expected domestic ad revenue to grow in the mid-single digits in the current quarter.
He said Viacom looked well positioned for the upfront ad market because ratings for many of its networks are up and some of Viacom’s key advertising categories look strong, including electronics, wireless, quick serve restaurants and movies.
Operating income at the filmed entertainment unit was down 83% to $11 million.
Analyst Marci Ryvicker of Wells Fargo Securities said second-quarter revenue was below Wall Street’s consensus, while operating income exceeded expectations.
“Domestic ad was a bit light. The positive, however, was that this was more than offset by stronger affiliate revenue,” Ryvicker said. “Viacom continues to push forward with strong affiliate revenue and cost controls.”