Improved profitability at Paramount drives Viacom earnings
Media giant Viacom Inc.'s fourth-quarter operating income surged because of cost-cutting and because longtime earnings laggard Paramount Pictures turned a tidy profit.
Results for the quarter ended Dec. 31 were buoyed by the over-the-moon box-office results of "Paranormal Activity" and strong home-video sales of Paramount's summer tent-pole hits "Transformers: Revenge of the Fallen" and "Star Trek." Profits increased $214 million for the filmed entertainment division.
"This is the highest profitability the film studio has generated in seven years," Viacom Chief Financial Officer Thomas Dooley said Thursday in an early-morning conference call with Wall Street analysts.
Viacom also said it had bought back the DreamWorks SKG film library from investor George Soros for $400 million.
Overall, the company generated earnings of $694 million, or $1.14 per share, for the fourth quarter of 2009. That compared with $173 million, or 28 cents per share, for the previous year. The increase was fueled, in large part, because of a charge of $454 million in December 2008 because of massive layoffs.
The results beat the estimates by analysts.
Revenue at Viacom dipped 3% to $4.1 billion for the quarter, reflecting continued weakness in the television advertising market. Viacom owns MTV, VH-1, Nickelodeon, Comedy Central and BET.
Viacom's "Rock Band" video-game franchise continued to produce sour notes. "It certainly was a challenging year in 2009," Viacom Chief Executive Officer Philippe Dauman said of the game's performance.
The company's movie channel start-up, Epix, has experienced some good news recently with two major cable operators, Cox and Charter Communications, agreeing to distribute the channel later this spring. "As we ramp up the distribution, revenues will start coming in," Dauman said. He said the channel, a joint venture with Lionsgate and Metro-Goldwyn-Mayer, should break even next year.
-- Meg James