Viacom Cable Ads Perk Up - Broadcasting & Cable

Viacom Cable Ads Perk Up

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Viacom’s U.S. cable ad sales bounced back during the second quarter, but Viacom division’s overall cable revenues increased more modestly.

Company-wide revenue increased 24% to $2.8 billion, but most of that gain came from the acquisition of movie studio DreamWorks. Without that deal, Viacom’s revenues would have increased 9%.

Investors are anxious over the company’s cable unit, composed of MTVN and BET, because they’re unaccustomed to single-digit percentage growth after enjoying roaring gains over the past few years.

The cable unit generated $1.8 billion in total revenue, up 8%. Domestic ad sales rose 10%, better than the alarming 6% posted during the first quarter. License fees from cable and DBS operators increased 10%.

The company’s international cable operations, however, fared much worse. Foreign ad revenues dropped 2%, and strong 13% growth in license fees stemmed largely from an acquisition rather than internal health.

Operating income increased a healthy 12% to $710.3 million.

Company-wide revenue increased 24% to $2.8 billion, but most of that gain came from the acquisition of movie studio DreamWorks. Without that deal, Viacom’s revenues would have increased just 7%.

However, even accounting for DreamWorks operating income increased a strong 14% to $663 million.

Viacom President Tom Freston said he was happy with the ad sales growth particularly since it’s “within the context of an ad sales environment which we all know has been fairly challenging.” Freston said that MTV has pretty much completed its sales for the upfront market, which he noted was “difficult and drawn out and not as robust as a few years ago.”Volume was up slightly and pricing was “flat to slightly up… our performance compares well to the broadcasting category, which appears to have ended down meaningfully on volume. It's a solid base from which we can build our business.”

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