) posted disappointing results for the third quarter of fiscal
2012. Both the top-and bottom-lines fell below the Zacks Consensus
Estimates. Advertising revenue (both domestic and international)
dropped significantly, primarily due to serious concerns regarding
the weak viewership ratings of its flagship Nickelodeon and MTV
channels. Similarly, customers' responses to new box-office
releases of Paramount Pictures were lukewarm.
However, there are several positive factors that still remain
for Viacom. Management is hopeful that its affiliate fee revenue
will accelerate in fiscal 2013 and that its advertising revenue
will improve in the ensuing fourth quarter. Further, Viacom is
generating strong free cash flow enabling the company to raise its
dividend rate and to pursue a systematic share repurchase program.
We believe Viacom is currently fully valued and therefore, reaffirm
our Neutral recommendation.
Viacom benefits from a well-balanced asset mix with
entertainment content at its core. The company enhanced its brands
worldwide through the creation and acquisition of hit programs, new
channels, successful motion pictures and other forms of
entertainment, including video game offerings.Viacom competes with
Time Warner Inc.
Walt Disney Co.
) to name a few.
An improving U.S. economy together with Viacom's disciplined
management team continue to make us optimistic about the company's
future growth prospects. We believe that Viacom is well positioned
for long-term growth as it continues to benefit from its
predominately cable networks-based business model, hit movie
releases, and monetization of contents from multiple distribution
CBS CORP (CBS): Free Stock Analysis Report
DISNEY WALT (DIS): Free Stock Analysis Report
NEWS CORP INC-A (NWSA): Free Stock Analysis
TIME WARNER INC (TWX): Free Stock Analysis
VIACOM INC-B (VIAB): Free Stock Analysis Report
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