), which competes with studios owned by media conglomerates
like Time Warner (
) and News Corp (
), suffered significant declines in its home entertainment
revenues during the 9 month period ended Sept 30 2010. The
disappointment stems from its primary home entertainment product -
DVDs that the company sells under the Paramount Pictures brand.
There is hope, however, as the decline may not be indicative of
an overbearing long-term trend. The issue actually appears to have
developed from a slowdown in Viacom's DVD releases.
We maintain a price estimate of $52.26 for Viacom
, which is about 10% above market price. We estimate that Viacom
generates 5% of its stock value from DVDs and film licensing.
DVD Revenue Declines Primarily Due to Market Share
While the DVD market has witnessed a general softness due to
the emergence of alternative online distribution platforms,
Viacom's revenue declines are primarily a function of losses in
its DVD market share. The company released significantly fewer
titles during the first nine months of 2010 vs. the same period
in 2009, and fewer options available to consumers from the studio
has resulted in weaker sales numbers for Viacom. Despite the fact
that Viacom released 9 films in the box office, it only released
5 titles for home entertainment. Accordingly, we now expect the
company to record significant DVD share declines for both
markets in its 2010 earnings report.
However we anticipate this trend to reverse in 2011, as an
increase in DVD releases triggers market share recovery. Viacom
will likely look to cash in on the expected success of upcoming
Paramount Pictures films like Kung Fu Panda 2, and should benefit
from a weak comparison base in 2010.
Viacom Revenues Can Also Get a Lift from Additional
Content Licensing Deals
Viacom may also look to reap additional profits by increased
licensing to alternative distribution platforms like Netflix (
), with which the company's joint venture Epix has already signed
a $1 billion deal. Viacom might look to supplement its licensing
revenues with similar deals going forward, independent of any
continued slowdown or pickup in the DVD market.
Whether DVD market softness continues or not, Viacom might be
willing to boost its licensing revenues with more such deals. We
currently project a slight increase in Viacom's film licensing
revenues in the years ahead, permitting the possibility of upside
to our base forecasts.
What do you forecast for Viacom's DVD and licensing revenue
outlook in the years ahead? Let us know your thoughts by
providing feedback in the comment box below. You can drag the
trend lines in the modifiable charts above to see how your
projections for DVD market share or licensing revenues might
impact Viacom's stock value.
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You can see
the complete $52.26 Trefis price estimate for
Viacom's stock here.
@raikul - tp kar rahe hai dost, ab itni thand main Kya aur
@ janak - why do say so ?
@ maalik - specify karne ki Kya jarorat hai ki kiske saath Gaye
….. vaise tumhara band baaja kab baj raha hai