Tags: viacom | profit | ad | sales

Viacom Profit Misses Estimates as Ad Sales Decline

Friday, 03 August 2012 09:19 AM

Viacom Inc., owner of the Paramount film studio and cable networks such as Nickelodeon and MTV, reported third-quarter profit that missed analysts’ estimates after advertising sales dropped the most in more than two years.

Excluding some items, earnings were 97 cents in the period ended June 30, New York-based Viacom said Friday in statement. Analysts had predicted $1 on average, according to data compiled by Bloomberg. Sales dropped 14 percent to $3.24 billion, trailing the $3.49 billion analysts estimated.

Ad sales slumped 9 percent, the most since the March 2009 quarter, during the U.S. recession. Viacom, which is relying on its cable-television business for 92 percent of annual operating income, is struggling with a ratings slump at Nickelodeon, the channel aimed at children.

Viacom, controlled by Chairman Sumner Redstone, fell 4 percent to $44 at 8:33 a.m. New York time before the markets opened. The stock has increased less than 1 percent this year.

Third-quarter net income decreased 7 percent to $534 million, or $1.01 a share, from $574 million, or 97 cents, a year earlier.

The networks unit, which also includes Comedy Central and BET, gets revenue from advertising and programming fees paid by TV-service providers.

Viacom renewed a rights deal with DirecTV last month after contentious negotiations that led to a 10-day blackout. The contract gives Viacom more than $600 million annually over the next seven years, a 20 percent increase over the last agreement, a person familiar with the matter said. The blackout during negotiations caused some DirecTV customers to cancel their service.

Ratings Declines

The increase in fees could help offset a drop in advertising dollars due to ratings declines at some of its networks, Michael Nathanson, an analyst with Nomura Securities Inc. in New York, said in a note last week.

Ratings have been down at Viacom, especially at Nickelodeon, a network aimed at children. Nickelodeon’s daytime viewership fell 27 percent during the three months ended in March, according to David Bank, an analyst with RBC Capital Markets in New York.

“However, we see some bright spots for MTV,” Bank said in a note last month, citing the popular MTV programs “16 and Pregnant,” “Teen Wolf” and “Teen Mom.”

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Friday, 03 August 2012 09:19 AM
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