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Home Entertainment Outpaces Theatrical for Viacom

3 Aug, 2012 By: Chris Tribbey

Home entertainment revenue for Paramount parent company Viacom was down 8% during the fiscal third quarter of 2012 (ended June 30) to $304 million, which still outpaced theatrical revenue, which was $283 million, down 52% year-over-year.

The lower theatrical revenues reflected a mix of fewer new releases compared to the fiscal third quarter of 2011, which saw Thor, Super 8, Kung Fu Panda 2 and Transformers: Dark of the Moon in theaters. Overall filmed entertainment revenue was $1.01 billion, down 29%. A decrease in DVD revenue was somewhat offset by digital revenue, Viacom executives said.

“Paramount … continued to strengthen its platform by aligning its slate to provide upcoming releases with the best possible opportunity to succeed in the global marketplace,” said Viacom president and CEO Philippe Dauman. “Paramount continues to judiciously manage costs and reduce overhead.”

For the fiscal fourth quarter, Viacom is expecting results for its filmed entertainment division comparable to the third quarter.

Overall, Viacom saw its revenue down 14% to $3.24 billion and profit down 12% to $512 million.

“Despite challenging year-on-year comparisons with last year’s strong third quarter, Viacom remains committed to pursuing its long-term strategy of international expansion, continued programming investment and ongoing focus on operational discipline,” Dauman said. “Viacom continues to bring cultural powerhouses to fans around the world, and we are aggressively investing in our brands to create new hits, like ‘Workaholics’ and ‘Legend of Korra,’ now the most watched kid’s program on cable in the quarter.”

Dauman addressed the future of licensing out the pay-TV platform Epix after Netflix’s exclusive two-year license agreement for the service ends Sept. 1. Epix is co-owned by Lionsgate, MGM Studios and Paramount Pictures.

“We’ve had discussions with several partners,” Dauman said, noting that Epix has proven profitable for Netflix. “We expect to have an announcement in the next couple of weeks.”

Dauman also noted that DirecTV will have a one-year option to carry Epix under pre-negotiated terms, as part of Viacom’s agreement with the carrier. The two reached an agreement July 20 after a nine-day blackout of Viacom channels due to a dispute over carriage fees.

“We hate to see a blackout occur,” Dauman said. “It’s certainly never occurred in any of the other renewals we’ve concluded. We look at distribution in a holistic way. We value all of our distribution partnerships. We evaluate what content we put on digital distribution … and we’re fairly agnostic on what form distribution takes as long as it’s added to our business.”

The long-term agreement gives DirecTV users access to Viacom channels via tablets, laptops and other TV Everywhere devices.

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