Paramount Pictures Corp., the film division business of
), recently dismissed litigation in the U.S. District Court in
New York regarding the publication of the latest installment of
Mario Puzo's famous novel "The Godfather".
Puzo expired in 1999 but his family published two more novels
named "The Godfather's Revenge," and "The Family Corleone"
posthumously without Paramount's consent, for which the company
sued his family. In return, Puzo's family countersued the company
for a $10 million fine and also requested before the court to
dismiss rights of the company to the original novel "The
Earlier, in 2004, Paramount gave permission to Puzo's family
to release a sequel to the novel Godfather despite gaining copy
rights to any sequel to the novel Godfather. However, the court
case regarding the issue has been settled.
Viacom reported dismal film division business in the recently
concluded quarter, with revenue dipping 39% year over year,
mainly hurt by the lack of popular movie releases and lower home
entertainment title releases.
However, the scenario is expected to change in fiscal 2013
where Paramount Pictures has a number of movies lined up for
release. Movies like G.I.Joe: Retaliation and World War 2, slated
to release in 2013, will certainly drive the Film division
business of the company going forward.
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, global brands, strong share repurchase plan,
multi-platform content, and is one of the fastest growing
traditional ad media. Moreover, continued success of movies
during this holiday season will drive box-office revenues going
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 for
Viacom. Currently, Viacom has a Zacks #3 Rank, implying a
short-term Hold rating on the stock.
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