Batzra blog

Viacom revenue falls short on weak DVD sales

NEW YORK (Reuters) – Viacom's quarterly revenue dropped a greater-than-expected 5 percent drop on a decline of DVD sales at Paramount Pictures, and its shares whipsawed throughout the trading day.

Its shares fell as much as 3 percent before setting a new three-year high after Viacom Chief Executive Philippe Dauman struck a confident tone on the company's global and U.S. advertising growth outlook. The shares later lost ground and were down 1.5 percent in afternoon trading.

Dauman expects a "particularly robust upfront this spring," when television programmers sell advertising ahead of the coming season, and he expects global and domestic ad revenue to rise by double-digit percentages in the March quarter.

Viacom's drop in revenue came as rivals Time Warner Inc and News Corp impressed Wall Street on Wednesday with strong advertising and overall revenue improvements.

"Viacom's domestic advertising growth is very impressive," said RBC Capital Markets analyst David Bank. "It just looks slightly less impressive coming after Time Warner and News Corp results."

Late Wednesday, the company said it would allow programs such as "The Daily Show with Jon Stewart" to be shown on Hulu, the online video joint venture of U.S. TV broadcasters. Viacom has sought to generate additional fees for its programs as consumers lose interest in purchasing DVDs.

Viacom's revenue for its fiscal first quarter, ended December 31, fell to $3.83 billion from $4.02 billion a year earlier, missing analysts' average forecast of $4.07 billion, according to Thomson Reuters I/B/E/S.

At the company's media networks division, which includes cable networks MTV, Comedy Central and Nickelodeon, first-quarter revenue rose 6 percent to $2.38 billion due mainly to stronger advertising sales, up 10 percent in the United States.

Revenue at Viacom's filmed entertainment group, which includes Paramount Pictures, fell 16 percent to $1.5 billion on a 44 percent slump in home entertainment revenue.

Adjusted earnings per share of $1.02 narrowly beat analysts' average forecast of $1.00.

During the first quarter, net income from continuing operations was $629 million, or $1.02 per share, compared with $691 million, or $1.19 cents per share, a year earlier.

Shares were down 67 cents at $43.30 on the New York Stock Exchange.

(Reporting by Jennifer Saba; Editing by Derek Caney)