Paramount renaissance drives Q3 profits at Viacom | Major Businesses | Business
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Revenues may be down on the quarter and for the nine months of the year, but Viacom is claiming that it has produced a quarter of strong progress, with clear evidence that its turnaround was delivering.

For the third quarter of the financial year ended 30 June 2018, Viacom posted revenues $3.24 billion, a decrease of 4% compared with the quarter in the previous year. Operating income inched up 1% annually to $752 million, principally driven by a restructuring charge in the prior year quarter and improvement in Filmed Entertainment operating results. Adjusted operating income decreased year-on-year by 5% to $767 million in the quarter and net earnings from continuing operations attributable to Viacom declined to $511 million, primarily due to the gain on sale of an investment in EPIX in the prior year quarter. Yet adjusted net earnings from continuing operations attributable to Viacom increased 1% to $475 million in the quarter.

Highlighting the standout items in the quarterly results, Viacom noted that a turnaround by Paramount Pictures drove increased filmed entertainment profitability in the quarter, with adjusted operating income up $160 million year-to-date.

Viacom’s media networks delivered growth in television share, gains in digital consumption and live event attendance, sequential improvement in domestic affiliate revenue growth and savings from cost transformation initiatives. The division’s revenues decreased 2% to $2.50 billion in the quarter, as a 17% annual increase in worldwide ancillary revenues to $158 million was offset by a 4% yearly decrease in worldwide advertising revenues to $1.19 billion and a 3% fall in worldwide affiliate revenues to $1.15 billion. US and international revenues each declined 2% on a comparable basis in the quarter to $1.99 billion and $509 million, respectively. Adjusted operating income for Media Networks decreased 8% to $799 million in the quarter, primarily reflecting lower segment revenues.

US advertising revenues decreased 3% to $922 million, reflecting said the company lower linear impressions. This was partially offset by higher pricing and growth in advanced marketing solutions revenues, which increased 33%. Non-US advertising revenues fell 4% compared with Q3 2017 to $269 million, driven by an unfavourable foreign exchange. The company pointed out that excluding a five-percentage point unfavourable impact from foreign exchange, international advertising revenues increased 1% in the quarter.

US affiliate revenues decreased 3% to $978 million, a sequential improvement of 100-basis points from the prior quarter. Excluding the impact of SVOD revenues in the quarter, domestic affiliate revenues were flat. International affiliate revenues declined 2% to $175 million in the quarter.

Among the company’s key brands, MTV was the fastest growing network in primetime among the top 50 broadcast and cable channels in the Adults 18-34 demo for the quarter. It has now increased year-over-year primetime ratings for four straight quarters and, collectively with VH1, held nine of the top 10 unscripted US cable series this year. The second season premiere of Floribama Shore in July 2018 brought in nearly 1 million viewers, with ratings up double-digits from its series debut. Paramount Network’s Yellowstone was the most watched scripted cable series of 2018 after The Walking Dead, with an average audience of approximately 4.4 million viewers in Live+3.

Viacom Digital Studios increased its quarterly total video views and watch-time 112% and 104% year-over-year, respectively. Since the third quarter of fiscal 2016, the company has tripled its total digital video streams across online and social platforms to 7.0 billion in the quarter. Additionally, Nick’s Noggin app is said to have ‘flourished’ on Amazon Prime Video Channels, with strong subscriber growth since its launch on the platform in May 2018.

The results showed, said Viacom president and chief executive officer Bob Bakish, that the company’s evolution into a truly global, multiplatform, brand- and IP-driven entertainment company was well underway.

“Paramount Pictures is revitalised, with outstanding box office performance and growing television production revenues driving substantial gains in profitability,” he said. “Our Media Networks brands posted significant gains in both linear flagship share and digital consumption, in addition to sequential improvements in domestic affiliate revenue growth... Additionally, we continued to diversify our business with growth in worldwide live event attendance and the expansion of a cross-company studio production initiative that leverages our sizable creative assets and global capabilities to drive”