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Weak Disc Sales Lower Viacom Earnings

3 Feb, 2011 By: Chris Tribbey

Paramount’s earnings for the final three months of 2010 were down 77% to $68 million, compared with $302 million during the same period in 2009, lowering parent company Viacom’s net earnings for the quarter by 14% to $620 million.

Noting “difficult year-over-year comparisons” Viacom president and CEO Philippe Dauman said the decline was primarily due to lower home entertainment revenues, with fewer tentpole titles during the quarter. The last quarter of 2009 saw Transformers: Revenge of the Fallen, Star Trek and G.I. Joe: The Rise of Cobra, while DreamWorks’ How to Train Your Dragon and Shrek Forever After were the headline titles for the fourth quarter of 2010.

“Looking ahead in fiscal 2011, we have a powerhouse lineup of franchise films and we expect our home entertainment results to improve as we now move past the last few quarters of difficult year-over-year comparisons,” Dauman said.

Overall filmed entertainment revenues were $1.5 billion, down 16% year over year, with home entertainment revenues down 44%. Television license fees also were down to $274 million, a decline of 38%. Theatrical revenues were up $323 million to $416 million, with DreamWorks Animation’s Megamind, The Fighter and True Grit performing well.

“The studio chalked up an extremely high hit rate,” Dauman said.

Viacom’s total quarterly revenue was $3.83 billion, a decrease of 5%.

On Feb. 2, the day before Viacom reported its earnings, the company announced a new content partnership with online video company Hulu, which is a joint venture between Fox, NBC/Universal and ABC.

The deal brings back to Hulu the popular Comedy Central shows “The Daily Show with Jon Stewart” and “The Colbert Report” — which were taken down from the site in early 2010 when Viacom and Hulu couldn’t come to terms — along with shows from Viacom’s other networks, including BET, VH1, Spike TV, TV Land and MTV.

Importantly for Viacom, while full episodes of many shows will be immediately available at the free, ad-supported Hulu.com and through the Hulu Plus subscription service, Hulu Plus subscribers will also have access to a selection of current programs, including “Tosh.O,” “Jersey Shore,” “Manswers,” “Let’s Stay Together” and “Hot in Cleveland,” 21 days after their initial airing.

Hulu Plus subscribers also will have access to more than 2,000 hours of library programming, including “The Chappelle Show,” “Reno 911,” “Beavis & Butthead,” “Real World,” “Punk'd” and more on connected consumer electronics, including HDTVs, Blu-ray Disc players and mobile devices.

“Windowing has always been very important in our mind, and the Hulu deal represents another evolution in that regard,” Dauman said during a Feb. 3 call with investors. “It replicates the [ad-supported and subscription] revenue streams we enjoy [elsewhere].”

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