Viacom income jumps 16% on films

Earnings rise on theatrical, DVD movie releases

By Danny King -- Video Business, 2/28/2008

FEB. 28 | Viacom’s fourth-quarter earnings beat analysts’ expectations as its Paramount Filmed Entertainment unit’s profit jumped on theatrical releases such as Bee Movie and home video titles including Transformers and Shrek the Third.

Earnings at the company’s media networks division also rose as the Writers Guild of America strike moved advertising dollars to Viacom’s cable networks from regular network TV.

Net income rose 16% to $559.9 million, or 86¢ a share, from $480.8 million, or 69¢, a year earlier, the company said in a statement today. Revenue jumped 19% to $4.25 billion.

Transformers and Shrek the Third combined to sell 34 million DVD copies worldwide, Paramount chief financial officer Tom Dooley said in a conference call today, boosting home entertainment sales by 12% to $1.08 billion and increasing Paramount’s operating profit by 40%. Paramount’s theatrical releases, which included Academy Awards Best Picture winner No Country for Old Men and nominee There Will Be Blood, totaled 26 Oscars and helped boost first-run revenue by 30%.

“Amid a crowded holiday season, Transformers was an unqualified hit,” Dooley said.

Viacom was expected to earn 83¢ a share on $3.99 billion in revenue, according to the average analyst estimate in a Thomson Financial survey. The company, whose Paramount unit backed Toshiba’s now-unsupported HD DVD next-generation player format, wasn’t specific about when it would begin releasing titles in Sony’s competing Blu-ray Disc format.

“We are quite happy there has been a unification of an important, new revenue stream for this industry,” CEO Philippe Dauman said on the call. “We will follow the consumer marketplace.”

Operating profit at Paramount’s media networks unit, where sales rose 18% to $2.45 billion, was bolstered by improved ratings at MTV and Comedy Central, which Dauman said had its highest-ever rated year.

For 2008, Viacom will invest more in network-based movie labels such as Nickelodeon, MTV, Comedy Central and BET, said Dauman, who added that, with strong box-office results from Cloverfield, “our 2008 slate is off to a great start.”

Viacom’s fourth-quarter ancillary revenue jumped 72% to $460 million largely on the sales of its Rock Band videogame.