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Viacom (VIAB) Q1 Earnings and Revenues Surpass Estimates

Viacom, Inc.VIAB performed impressively in the first quarter of fiscal 2017 (ended Dec 31, 2016) reporting better-than-expected earnings per share and revenues. The company's earnings (on an adjusted basis) of $1.04 per share handsomely beat the Zacks Consensus Estimate of 83 cents. However, the bottom line contracted 12% on a year-over-year basis.

Total revenue in the quarter was $3,324 million, up 5% year over year. The top line also surpassed the Zacks Consensus Estimate of $3,200.9 million and was boosted by strong growth in its domestic affiliate and theatrical revenues. The impressive quarterly performance on both fronts pleased investors, which boosted shares during early trading.

Quarterly adjusted operating income fell 11% year over year to $748 million. At the end of the first quarter of fiscal 2017, Viacom had $443 million of cash & cash equivalents, and $11,783 million of outstanding debt compared with $379 million and $11,896 million, respectively, at the end of fiscal 2016.

Segmental Performance

Media Networks

Quarterly revenues for this Zacks Rank #3 (Hold) company's media networks segment were $2.59billion, up 1% year over year. While domestic revenues were flat at $2.06 billion, international revenues climbed 5% to $534 million. Foreign currency movements adversely impacted segmental results to the tune of 2%. You can see the complete list of today's Zacks #1 Rank (Strong Buy)stocks here . While domestic revenues were flat at $2.06 billion, international revenues climbed 5% to $534 million. Foreign currency movements adversely impacted segmental results to the tune of 2%.

The segment generates revenues principally from three sources: (i) advertising revenues; (ii) affiliate revenues, and (iii) ancillary revenues. Affiliate revenues climbed 2% to $1.14 billion with such revenues rising both on the domestic and international fronts. Advertising revenues decreased 2% to $1.29 billion, mainly due to below-par showing on the domestic front. Moreover, the quarter witnessed growth of 20% to $151 million in ancillary revenues, thanks to strong growth domestically as well as internationally.

Also, quarterly operating income (on an adjusted basis) declined significantly to $987 million.

Filmed Entertainment

Quarterly revenues declined 24% year over year to $758 million. This segment saw a massive increase (104%) in theatrical revenues. While home entertainment revenues climbed 2%, license revenues grew 3% and revenues on the ancillary front jumped 86%. The segment reported an operating loss (on an adjusted basis) in the quarter of $180 million. Additionally, the timing of marketing expenses for fiscal 2017 theatrical titles contributed to the segmental loss.

Another Key Development

Viacom is leaving no stone unturned to turn around its fortunes. In the fiscal first quarter, Viacom's proposed merger with CBS Corp. CBS was cancelled. The merger would have given Viacom a much-needed boost after a plethora of management and performance issues that have been affecting it over the past few months. Also, it has been inking multiple deals of late, in a bid to expand further. To this end, Viacom inked a deal with Telefonica S.A TEF in Nov 2016, to acquire Television Federal S.A. (Telefe).

In another move aimed at combating the challenges, Viacom unveiled a new strategic plan. As a part of the plan, it intends to focus on six of its core brands- BET, Comedy Central, MTV, Nickelodeon, Nick Jr. and Paramount.

Price Movement

Shares of Viacom have outperformed the Zacks categorized Media-Conglomerates industry over the past one month on the back of its efforts to overcome its struggles. Shares of the company have increased 9.56% in the last one month, while the industry has witnessed a gain of only 1.5% in the same period.

Upcoming Release

Investors interested in the broader Consumer Discretionary space will keenly await the fourth quarter 2016 earnings report of another key player - Discovery Communications Inc. DISCA . Results are scheduled to be revealed on Feb 14.

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CBS Corporation (CBS): Free Stock Analysis Report

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Viacom Inc. (VIAB): Free Stock Analysis Report

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


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

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