Viacom Beats on Q1 Earnings, Lags Rev - Analyst Blog


Viacom Inc. ( VIAB ) declared first-quarter 2014 financial results with the bottom line beating the Zacks Consensus Estimate but the top line missing the same.

Net income from continuing operations in the reported quarter was $547 million or $1.20 per share compared with $461 million or 91 cents per share in the prior-year quarter. The reported earnings were above the Zacks Consensus Estimate of $1.15 per share.

Total revenue in the reported quarter was $3,197 million, down 4% year over year and also below the Zacks Consensus Estimate of $3,345 million. A substantial decline in Film Entertainment Segment revenues led to the year-over-year decline. Quarterly operating income was $960 million, up 20% year over year.

During the reported quarter, Viacom bought 10.3 million common shares for $850 million. At the end of the first quarter of fiscal 2014, Viacom had $1,417 million in cash & cash equivalent and $11,868 million in outstanding debt on its balance sheet compared with cash and cash equivalent of $2,403 million and outstanding debt of $11,867 at the end of fiscal 2013. At the end of the first quarter of fiscal 2014, the debt-to-capitalization ratio was 0.71 against 0.69 at the end of fiscal 2013.

Media Networks Segment

Quarterly revenues of $2,541 million inched up 6% year over year, mainly triggered by better advertising and affiliate revenues. Quarterly operating profit was $1,114 million, up 8% from the prior-year quarter. Both domestic and worldwide affiliate revenues rose 10% year over year. On a year-over-year basis, both domestic and worldwide advertising revenues rose 3% and 4%, respectively.  

Filmed Entertainment Segment

Quarterly revenues fell sharply by 30% year over year to $681 million, mainly affected by fewer movie releases. Quarterly operating loss was $74 million, up 47% year over year.

Global Theatrical revenues increased 52% year over year, primarily due to less hit movie releases than the year-ago quarter. Worldwide Home Entertainment fell 37% coupled with a 3% decline in television license fees. However, Worldwide Filmed Entertainment ancillary revenues rose 9%.

Our Take

We believe that Viacom is well positioned for long-term growth as it continues to benefit from its predominant cable networks-based business model, strong affiliate fee revenue growth, increased share repurchase plans and multi-platform content.

However, stiff competition from media companies like News Corp. ( NWSA ), CBS Corporation ( CBS ) and Time Warner Inc. ( TWX ) along with mounting debt may act as headwinds for the stock, going forward.

Currently, Viacom has a Zacks Rank #3 (Hold).

CBS CORP (CBS): Free Stock Analysis Report

NEWS CORP NEW-A (NWSA): Free Stock Analysis Report

TIME WARNER INC (TWX): Free Stock Analysis Report

VIACOM INC-B (VIAB): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: CBS , NWSA , TWX , VIAB

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