Viacom Q1 Earnings Down 34%30 Apr, 2009 By: Chris Tribbey
Viacom — parent of Paramount, MTV and other media companies — saw its first-quarter earnings fall 34% to $177 million (on revenue of $2.91 billion), compared to the same period in 2008, with drops in revenue from advertising and filmed entertainment.
Home entertainment revenue was down 9%, from $499 million in the first quarter of 2008 to $452 million this year. Overall, Viacom’s filmed-entertainment division saw a 5% drop in revenue during the quarter, down to $1.08 billion.
“Strong theatrical performance was not enough to offset ongoing weakness in the home entertainment market,” said President and CEO Philippe Dauman April 30 in a conference call with investors. “The soft retail environment continued to weigh on our consumer products.”
However, with a second Transformers offering, the new Star Trek movie, and a G.I. Joe adaptation on the way, Dauman and CFO Thomas Dooley expressed hope that Paramount’s slimmer release schedule would translate to better profits later this year, both at the box office and on DVD.
“The weak economy continued to dampen the home entertainment market, and Paramount was not immune to the impact,” Dauman said. “Consumers are particularly selective when it comes to acquiring catalog titles. In this regard, our focus on franchise pictures should serve us well.”
Dooley noted that the decline in home entertainment revenue reflects fewer DVD releases, “as well as the prior year’s recognition of $29 million of revenue related to the conclusion of our HD DVD agreement.” Paramount originally backed the high-def format in August 2007.
Dauman added that he was encouraged by the revenue coming from Blu-ray Disc, but wary of the proliferation of free online content.
“To the extent you have Blu-ray revenues growing ... that should be a good factor as the margins are better,” he said. “[Online] what we need to do is satisfy our consumers and make sure we don’t cannibalize our core brands.”