) declared excellent financial results for the second quarter of
2012 surpassing both the top and bottom line estimates. The strong
performance was mainly fueled by higher revenues, increased margins
and increased share repurchases.
Net income from continuing operation in the quarter was $588
million or $1.08 per share compared with $376 million or 63 cents
per share in the prior-year quarter. Adjusted EPS of 98 cents was
also above the Zacks Consensus Estimate of 90 cents.
Total revenue in the reported quarter was $3,331 million, up 2%
year over year and also beat the Zacks Consensus Estimate of $3,317
million. The year-over-year upside in revenue was mainly
attributable to the strong performance of the Media Networks
affiliated revenue segments. Quarterly operating income was $932
million, up 22.6% year over year.
During the reported quarter, Viacom bought 14.7 million common
shares for $700 million. At the end of the second quarter of fiscal
2012, Viacom had $1,135 million in cash & cash equivalent and
$7,757 million in outstanding debt on its balance sheet compared
with cash & cash equivalent of $1,021 million and outstanding
debt of $7,342 at the end of fiscal 2011. Debt-to-capitalization
ratio at the end of the reported quarter was 0.49 compared with
0.46 at the end of fiscal 2011.
Media Networks Segment
Quarterly revenue of $2,190 million increased 5% year over year.
This was mainly driven by solid growth in affiliate fees, mitigated
somewhat by reduced ancillary sales. Quarterly operating profit was
$893 million, up 11% year over year.
Domestic and worldwide affiliate revenues climbed 15% and 17% in
the reported quarter, respectively, mainly fueled by growth in
digital sales and expansion in rates. Domestic advertising revenue
crept up 1% year over year but worldwide advertising revenue
remained flat year over year.
Filmed Entertainment Segment
Quarterly revenue dropped 5% year over year to $1,169 million,
buoyed by lower theatrical and license fee revenues, partly offset
by higher ancillary revenues. Quarterly operating profit was $115
million, up 195% year over year.
Theatrical revenue fell 19% year over year. However, Worldwide
Filmed Entertainment ancillary revenue plummeted 41% year over
We believe that Viacom is well positioned for long-term growth
as it continues to benefit from its predominately cable
networks-based business model, strong affiliate fee revenue growth,
continuous hit movie releases, strong share repurchase plan,
multi-platform content, and is one of the fastest growing
traditional ad media.
However, stiff competitions from other media companies like
Time Warner Inc.
) along with slow economic recovery may act as headwinds for the
stock going forward. We, thus, maintain our long-term Neutral
recommendation on Viacom.
Currently, Viacom has a Zacks #3 Rank, implying a short-term
Hold rating on the stock.
NEWS CORP INC-A (NWSA): Free Stock Analysis
TIME WARNER INC (TWX): Free Stock Analysis
VIACOM INC-B (VIAB): Free Stock Analysis Report
To read this article on Zacks.com click here.