Viacom reported higher first-quarter earnings Thursday as its cable networks continued to rebound.
Net income was up 16% to $540 million, or $1.20 per share, from $470 million, or 92 cents a share, a year ago.
Revenues dipped 4% to $3.197 billion.
"Once again, Viacom's results reflect our significant investments in content, our deep connection with audiences and our ongoing financial discipline," said Philippe Dauman (pictured), president and CEO of Viacom, in a statement. "Our media networks continue to lead on television while also pioneering new, multi-screen experiences for users and expanded opportunities for advertising and distribution partners."
At Viacom's media networks unit, where Nickelodeon has been recovering from a severe ratings drop, operating income rose 8% to $1.114 billion on a 6% increase in revenue to $2.5 billion.
Affiliate revenues were up 10% and ad revenues rose 4%, including 3% on the domestic side.
The domestic ad revenue gain was smaller than analysts expected. During the company’s earnings conference call, Dauman said that the marketplace softened in November, when the government was at a budget impasse.
“That dissipated once the budget deal occurred and we started seeing strength again in December and so we're continuing into this quarter where demand is back to normal,” Dauman said.
Dauman also said that he expected to see sequential improvement in domestic ad sales growth in the current quarter, despite a shift of Easter to the second calendar quarter. “Despite that, we will see absolute growth, sequential improvement in ad sales growth from December quarter, and we see good strength in demand in the marketplace right now.” Easter will contribute to a stronger second quarter, he noted.
Dauman also noted that the Epix joint venture added distribution with Time Warner Cable, leaving only Comcast and DirecTV as distributors who don’t carry the premium service. In response to a question about adding original programming to Epix, he said: “We already have original programming on EPIX, but we are talking, the partners are talking about getting into scripted series programming at EPIX and you'll see that coming to help cement and further grow the economics of Epix.”
Viacom said it returned $1.1 billion to shareholders during the quarter through higher dividends and stock buybacks.
Analyst Michael Nathanson of MoffettNathanson, increased his earning per share estimate for Viacom after the earnings announcement. In a research note, he said domestic ad growth looks OK and international appears to be turning a corner. On top of that, Viacom trades at a cheaper multiple than other media companies.
“We think that the combination of solid advertising, strong and stable affiliate fee growth, attractive valuation and a shrinking equity base will continue to drive the stock higher,” Nathanson said.
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