Viacom Profits Reach Record Mark for Full Fiscal Year; CEO Credits ‘TMNT,’ ‘Transformers’

Q4 itself exceeds earnings, revenue estimates

Last Updated: November 13, 2014 @ 7:55 AM

Viacom set records for fiscal 2014, with profits at $4.13 billion for the year, driven by a rise in TV affiliate fees and despite falling television ratings and smaller movie takes due to “the number and mix of films,” the company stated in Thursday’s earnings release.

Earnings per share for the year were at $5.40, also a record.

In Q4, analysts had forecast earnings of about $1.68 per share on $3.9 billion in revenue. The company topped those targets with a reported $1.71 per share on $3.99 billion in revenue.

Compared to 2013’s related three-month period, both of those metrics rose as Media Networks and Filmed Entertainment grew.

The Media Networks’ segments affiliate growth was slightly offset by advertising declines due to weakened ratings. Filmed Entertainment’s Q4 boost was thanks to late “Transformers: Age of Extinction” takes — particularly in China — and “Teenage Mutant Ninja Turtles.” That rise was offset a bit by home entertainment decline.

The ratings issues was discussed at length in Thursday mornings Viacom conference call. Those details are below.

For the quarter ended Sept. 30, 2014, Viacom repurchased 10.4 million shares under its stock repurchase program for $850 million. At the time, the company had 414 million shares of common stock outstanding.

As of Nov. 12, 2014, the company had $6.24 billion remaining in its $20 billion stock repurchase program.

“Viacom’s record financial results in 2014 demonstrate the strength of our brands and continuing momentum for our strategy of investing in creativity, with a relentless focus on growing demographic and geographic markets and embracing new distribution platforms,” Philippe Dauman, president and CEO, said in the release.

He added: “Despite ratings challenges and uncertainty in the scatter advertising market at the close of the year, Viacom’s advertising revenues grew in fiscal 2014, as our creative and marketing teams rolled out innovative new offerings.”

Later on Thursday morning, the subsequent Viacom earnings call dedicated a decent amount of time discussing what the executives (and many others in the industry, for that matter) believe to be an antiquated Nielsen ratings system, as the company’s younger-skewing networks have viewing that isn’t traditionally measured or monetized.

The Viacom heads insisted that advertising demand for their product is strong, but the dropping ratings aren’t helping them pull in fair market value. They called the domestic dip a “temporary issue,” as they are in the process of finding new ways to track the new viewing. One exec referred to that effort as “self-help.”

The brass believes that when the industry catches up to consumer trends, they will “disproportionally benefit” from multiplatform numbers, citing strength in apps and gaming platform viewing.