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Viacom’s Dauman Blames Economy for Soft Disc Sales

Iron man
Iron Man

By Chris Tribbey | Posted: 12 Feb 2009

Even backed by Iron Man, with an assist from Indiana Jones and the Kingdom of the Crystal Skull and Kung Fu Panda, Paramount Home Entertainment’s fourth quarter (ended Dec. 31, 2008) revenue declined 6% from the previous-year period, to just over $1 billion. All filmed entertainment revenue for the fourth quarter fell 2%, to $1.87 billion.

Meanwhile, for the year, home entertainment revenues actually increased 9% to more than $2.7 billion. Theatrical revenue grew 17% to $1.71 billion.

Viacom — parent of Paramount, MTV and a host of other media companies — disclosed the home entertainment revenue in its quarterly financials.

The company attributed the quarterly decrease in home entertainment revenue to “the industry-wide decline in the home entertainment market in the fourth quarter.”

“It was a difficult year for everyone,” said Philippe Dauman, president and CEO of Viacom, in an earnings call. “Despite the orgy of pessimism of late, the tide of the economy and our industry will rise again.”

He blamed the home entertainment decline in the fourth quarter on the economy and titles, rather than a seachange in consumer habits.

“As it’s been widely discussed in the past week, home entertainment was hit by the soft retail environment,” Dauman said. “In the fourth quarter, we saw the conversion rate of box office to home entertainment soften. … The decline in home entertainment revenues will continue for a while. … On a going-forward basis, the economy will be the most significant factor [in terms of DVD sales].”

He also noted home entertainment was down in the fourth quarter partly because Paramount didn’t have releases as strong as Shrek the Third or Transformers, which came out on video in 2007.

Viacom slashed nearly 900 jobs — or about 7% of its workforce — in December to help see it through the current recession.

The CEO said he has high hopes for Paramount in 2009, with Star Trek, Transformers 2 and G.I. Joe theatrically.

During the call, Dauman also spoke to studios experimenting with same-day VOD and DVD releases.

“Many studios are experimenting with day-and-date, but mostly with the smaller titles,” Dauman said. “Even with this contraction of home entertainment, the tentpole titles like our Iron Man are performing well.”

Overall, Viacom posted net income of $173 million, down 69% from $560 million during the same period in 2007. Revenues for the quarter remained flat at $4.2 billion.

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