Viacom: Q1 Up, but DVD Down5 May, 2008 By: Chris Tribbey
DVD revenue was slightly down for Paramount Home Entertainment, mostly due to a decline in catalog sales, parent company Viacom reported in its first-quarter 2008 earnings.
However overall profits rose to $270 million, or 33%, compared to the same period in 2007, thanks to the Rock Band video game and higher advertising revenue for Viacom's MTV Networks. Total revenue for the company grew 15% to $3.12 billion.
“Home entertainment revenue increased $89 million, or 22%, versus the first quarter of 2007,” said Viacom CFO Thomas E. Dooley. “However, the quarter included a new home video distribution agreement that required gross revenue treatment and $29 million of revenues recognized in connection with the conclusion of our HD DVD agreement.
“Home entertainment revenue would have been down slightly if those items were not included in the quarter.”
Theatrical revenue dropped 7% to $247 million.
Viacom CEO Philippe Dauman made special mention of both his company's new VOD and TV distribution venture with MGM and Lionsgate, and the iTunes day-and-date electronic sellthrough of movies with DVD.
“This joint venture is feasible because we find ourselves at a unique point in time when there is product available from multiple studios for the pay TV window, an opportunity that will not be replicated for many years,” he said. “We now have the chance to reinvent this window and we intend to do so, no longer encumbered by the restrictions previously placed on us and our partners.”
For iTunes, Dauman said that the studios needed to find the right price point with Apple for new releases ($14.99).
“The other studios had not agreed to distribute current releases on iTunes because their terms had to be negotiated so that the pricing would be consistent with the pricing that we use for DVDs that we sell to Wal-Mart, Best Buy, and other outlets,” he said. “So this just reflects our selling. And again, this is a sale window, a download window we're talking about. It's totally consistent with the other efforts that we've made in distributing at the right price points, DVDs or equivalents during the DVD window.”