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Viacom CEO: 'Paramount Will Come Back Strongly'

12 Nov, 2015 By: Erik Gruenwedel

Paramount Home Media Distribution Q4 revenue drops 54%

Paramount Home Media Distribution Nov. 12 reported a 54% decline ($192 million) in fourth-quarter (ended Sept. 30) revenue to $164 million, from $356 million during the prior-year period. For the fiscal year, home entertainment revenue dropped 25% ($289 million) to $871 million, compared with $1.16 billion in the previous fiscal year.

The Paramount Pictures’ unit attributed the decline to a reduced release slate primarily driven by unfavorable year-over-year comparisons when PHMD had Noah, How to Train Your Dragon (last DreamWorks Animation title), and digital (and one-day disc) sales of Transformers: Age of Extinction on the books.

Yet, in the fourth quarter, PHMD had Interstellar and The SpongeBob SquarePants Movie: Sponge Out of Water in retail circulation. The titles have sold a combined 3.3 million DVD/Blu-ray Discs for $60 million. By comparison, Noah and How to Train Your Dragon sold a combined 2.1 million discs for $35.7 million, according to The-Numbers.com. While Age of Extinction has sold 3.5 million discs for $57.2 million since its Sept. 30 retail street date, PHMD only recognized one day of sales in the fiscal result.

Speaking on the fiscal call, Viacom CEO Philippe Dauman said that beginning in the 2016 fiscal quarter (which began Oct. 1), Paramount is returning to a full 15-film theatrical production slate, in addition to three titles from Paramount Animation, which is releasing The Little Prince next month. 

“We just had too few movies to support the infrastructure,” Dauman said. “We believe Paramount will come back strongly in the years to come.”

Indeed, besides Mission: Impossible — Rogue Nation and Terminator: Genisys, Paramount’s top box office titles in the 2015 fiscal year included Paranormal Activity: The Ghost Dimension and Scouts Guide to the Zombie Apocalypse — two lower-budget titles released amid theater boycotts due to the studio’s new controversial digital distribution strategy.

Studio revenue in the quarter declined 24% ($332 million) to $1 billion, down 23% ($842 million) for the year at $2.88 billion.

Viacom, like other media companies, is reassessing license agreements with subscription-streaming services, notably Netflix. As the SVOD pioneer grows its global footprint, media companies have begun to view Netflix as both friend and foe.  

Dauman said Viacom is selecting distribution channels based on the  programming (TV, movies, kids), including specific shows. He said proprietary kids SVOD service Noggin continues to perform well and will be available on Android and internationally for the first time beginning the week of Nov. 16.

“We have seen growth in our presence on Hulu Plus [which includes incremental ad revenue] and a diminishment of our presence on Netflix. And that goes for both our networks here at Viacom and Epix,” Dauman said. “We look at not just the monetary value, but the promotional value of having shows at different points in the cycle on SVOD.”

Dauman cited China as a huge market for Viacom, despite lacking a traditional TV broadcast infrastructure.

“You’re seeing a larger number [in China] than in the U.S. of significant SVOD players,” he said.

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