Tax Gains Lift Viacom Net Despite Lower Revenue - Broadcasting & Cable

Tax Gains Lift Viacom Net Despite Lower Revenue

Cable network domestic ad revenue down 5%
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Viacom’s bottom line was boosted by the new tax laws but its cable network business reported lower revenue and profits.

First quarter net income rose to $537 million, or $1.33 a share, from $396 million, or $1 a share. Adjusted net income from continuing operations were flat at $413 million.

Revenue fell 8% to $3.1 billion.

Viacom’s controlling shareholder, the family of Sumner Redstone, is pushing to combine the media company with CBS, which the Redstone’s also control.

Adjusted operating include for Viacom’s Media Networks business fell 7% to $913 million because of higher expenses and a 1% drop in revenue.

Domestic Media Network revenue was down 6% to $1.93 billion.

Domestic ad revenue dropped 5% to $937 million because of lower linear impressions.

Domestic affiliate revenue was down 8% to $907 million because of subscriber declines and lower SVOD revenue.

“In the quarter, Viacom aggressively drove progress on our strategic plan, delivering improvements in our business and positioning the Company for the future,” said CEO Bob Bakish. “Viacom’s most-watched portfolio of domestic cable brands grew viewership share in the quarter, led by our powerful flagship networks, which now includes Paramount Network – the biggest and most ambitious network rebrand in our history. Internationally, we continue to deliver double-digit top-line and bottom-line Media Networks gains while launching innovative new partnerships in growth territories around the world.”

The signs of progress, Bakish said, included growth in worldwide digital ad revenue, expanding distribution via virtual multichannel distributors. It also acquired non-cable channel businesses WhoSay and VidCon.

The company said it is projecting a return to growth in adjusted operating income and adjusted diluted earnings per share in the second half of the fiscal year.

On its earnings call with analysts, Bakish said that affiliate revenue would drop less than expected because the company's flagship cable channels were restored on Suddenlink and Charter systems sooner than anticipated. Those losses will be on the low end of single digits, he said.

Ad revenue growth is expected improve sequential during the year, he added, with growth turning positive in the fourth quarter.

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