Viacom's net earnings fell 68% in the fourth quarter to $172 million, a result of the slowing economy. For the full year the media company, which owns MTV networks and film studio Paramount, saw a 24% decline in net earnings, to $1.2 billion.
Viacom also recorded $454 million in charges related to restructuring and program projects that were abandoned. The Times Square-headquartered media concern said late last year it would let go of around 850 staff. Revenue for the quarter was flat at $4 billion and for the full year rose 9% at $14.6 billion.
Having steered clear of any transformative acquisitions in the last few years, Viacom's restructuring charges were much smaller than other media company write-downs. News Corp, Time Warner and CBS Corp., have all had to write-down the falling value of their assets in recent months.
President and chief executive of Viacom, Philippe Dauman, said: "Our fourth quarter results reflect the realities of a challenging economy. The broad marketplace conditions weighed on our advertising, home entertainment and consumer products business. That was offset, however, by solid growth in our affiliate and theatrical revenues both up double digits."
At the company's media networks division, which houses its international cable operations, advertising revenue was down 3% for the fourth quarter, to $1.3 billion, and was up 1% for the year, at $4.7 billion. Operating income at the unit dropped 44%, to $509 million, for the quarter, and fell 10% for the year, at $2.7 billion.
TV sales executives around the cable and broadcast industry are seeing advertisers pull back on spending commitments made in the upfront. On the company's third quarter earnings call, Dauman confirmed that upfront ad commitments accounted for 70% of sales in the fourth quarter. Upfront sales are being cut at percentage rates that lie anywhere between the high single-digits and the mid-teens, according to a variety of sources.
MTV Networks, which houses channels such as Nickelodeon to Comedy Central, has also seen a reduction in ad spending for the second quarter, though agency buyers say the company is working hard to maintain volume by being more competitive on pricing in the scatter market. The company is dealing with ratings issues at MTV with a new programming block on Sunday nights.
Over the holiday period, Viacom renegotiated a recent carriage deal with Time Warner Cable for its channels and was thought to have extracted higher rates for its programming. For the full year, affiliate revenue was up 12% to $2.6 billion.
Separately, media watchers have been focusing close attention on the slowing DVD market. At Viacom's home entertainment unit, revenue was down 6%, to $1 billion, for the quarter and for the year showed a 9% growth, to $2.7 billion.