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Weak Slate Drops Paramount’s Q1

29 Apr, 2010 By: Chris Tribbey

A weak theatrical slate and a lack of DVD/Blu-ray Disc releases comparable to last year’s Madagascar: Escape 2 Africa contributed to Paramount Pictures reporting a first-quarter (ended March 31) operating loss of $86 million, compared with an operating loss of $123 million during the same period a year ago.

Paramount Pictures includes Paramount Home Entertainment, which jointly distribute Dreamworks Animation titles, such as the lucrative “Madagascar” franchise.

Despite strong packaged media and electronic sales for Oscar-nominated Up in the Air and continuing sales of the fourth quarter releases of Star Trek, Transformers: Revenge of the Fallen and G.I. Joe: The Rise of Cobra, a 6% decline in theatrical revenue contributed to an 18% drop to $886 million (from $1 billion last year) in overall studio revenue.

“We did have three fewer theatrical releases, and we were lapping the very strong home entertainment release of Madagascar: Escape 2 Africa in the first quarter of 2009, while we did not have a DreamWorks Animation DVD release this past quarter,” said Tom Dooley, senior EVP of Paramount parent company Viacom, in a conference call with investors.

Despite the setback, Viacom CEO Philippe Dauman said Paramount’s 2010 film slate would get a huge boost with the May 7 theatrical opening of Iron Man 2, followed shortly by DreamWorks Animation’s Shrek Forever After in 3D and the Nickelodeon Movies tentpole title The Last Airbender from M. Night Shyamalan.

“The release of these high-profile titles should bode well for the studio’s overall performance as they move through their revenue windows,” Dauman said, in a statement.

Viacom itself enjoyed a 37% jump in earnings for the quarter compared to the previous year, up to $243 million, largely due to better advertising revenue and strong cable ratings. Revenue for the quarter for the media giant was $2.79 billion.

MTV, Nickelodeon and BET networks all saw audience gains, Dauman said, helping Viacom’s media networks division post an operating income of $684 million for the quarter, up 9% from the $629 million the division earned in the first quarter of 2009.
“We are continuing to explore how best to use new products and technologies, such as next-day VOD,” Dauman said. “Over the past quarter, we have continued to roll out more high-definition channels. We are also continuing to explore opportunities to bring 3D programming to our brands. This concept is still in a nascent stage and we are primarily looking at special events, such as major music performances for our music channels and sporting events for Spike.”

Regarding Epix, the high-def pay-TV and online streaming channel co-owned by Lionsgate, MGM and Viacom, Dauman said the Dish Networks carriage deal announced April 19 was just a sign of things to come for the channel.

“We are very much on track to increase our distribution to the point where we will reach break-even and beyond in the next calendar year, in 2011,” he said.

Regarding Marvel Entertainment, which was acquired by The Walt Disney Co. for about $4 billion in mid-2009, Dauman noted that four more Marvel-based films will come through Paramount after Iron Man 2, including The Avengers, Captain America and Thor.

“We don't anticipate that to be renewed given that Disney acquired Marvel,” he said.

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