Viacom Beats Q1 Earnings Forecast Despite Declines in US TV Ratings, Paramount’s Box Office

Potential CBS mate (yes, again) sees revenue drop 8 percent

viacom earnings
Viacom's logo on the iconography of a dollar bill

Viacom outdid Wall Street’s first-quarter 2018 earnings expectations, but with declines in domestic TV ratings and at Paramount Pictures’ box office ticket sales, the company didn’t hit media analysts’ revenue mark.

The street had forecast earnings per share (EPS) of 94 cents on $3.14 billion in revenue, per a Yahoo Finance-compiled consensus. Viacom actually earned an adjusted $1.03 per share on $3.07 billion in revenue. With the benefits of a big tax cut, Viacom was able to report nice net earnings growth and GAAP EPS of $1.33 per share. Thanks, government!

Shareholders should be generally pleased seeing an EPS beat, but even that adjusted figure was down a penny per share from the comparable quarter last year. Overall revenue sunk 8 percent from Q1 2017 — and no one is happy with that.

Viacom’s Media Networks segment saw its revenue tick down 1 percent — the story was worse than that domestically, however. Stateside, ad sales dropped 5 percent on lower linear TV ratings. A 22 percent uptick in international advertising revenues helped mask and offset some of the negative U.S. news.

Revenues at the company’s Filmed Entertainment dove 28 percent year over year, 42 percent in America. At the box office specifically, the decline was 48 percent — and again, worse here at home. Speaking of “home, ” Viacom-Paramount’s home entertainment revenues were down 25 percent, due in large part to an unfavorable comparison to last year’s “Star Trek Beyond” home release. There were other sales drop offs as well, and everything was worse within our borders.

We’ll let Viacom President and CEO Bob Bakish put a happy face on the whole thing below.

“In the quarter, Viacom aggressively drove progress on our strategic plan, delivering improvements in our business and positioning the Company for the future,” Bakish said. “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.

“Viacom has also made considerable progress in its push to accelerate consumption and monetization on next-generation platforms, achieving substantial growth in worldwide digital advertising revenues, expanding distribution on fast-growing virtual MVPD and mobile services, and ramping up resources and talent at Viacom Digital Studios,” his prepared remarks continued. “Additionally, since the end of the quarter, we continued to expand our digital capabilities with the acquisition of influence marketer WHOSAY and the world’s premier online video event, VidCon. In addition, our strategy to further diversify our core properties off-screen through live events, hospitality and consumer products continues to progress, with the much anticipated Broadway premiere of the ‘SpongeBob SquarePants’ musical in the quarter, along with new initiatives across our portfolio.

“We remain deeply committed to maintaining strong financial discipline and delivering returns for our shareholders,” Bakish concluded. “In the quarter, Viacom continued to improve its leverage profile and we are on track to achieve $100 million in new cost savings in the current fiscal year, and hundreds of millions more in 2019.”

Shares of VIAB stock closed Wednesday at $30.51, down 74 cents per share. The U.S. stock markets officially reopen at 9:30 a.m. ET.

Bakish and other Viacom execs will host a conference call to discuss these results in greater detail at 8:30 a.m. ET. Oh, and surely another Redstone Family-controlled company, CBS, will come up as well.

You see, CBS and Viacom were one company until 2006. In recent years, the former has thrived as the latter struggled. The two publicly traded corporations are currently exploring re-merging once more.