Viacom Inc. VIAB declared third-quarter fiscal 2015 financial results wherein both the top and the bottom line lagged the Zacks Consensus Estimate. Lack of hit movie releases coupled with a decline in domestic advertising revenues resulted in the disappointing performance.
Adjusted net income from continuing operations in the reported quarter was $591 million or $1.47 per share compared with $618 million or $1.42 in the prior-year quarter. Moreover, the adjusted earnings figure missed the Zacks Consensus Estimate by a penny. Meanwhile, total revenue in the quarter stood at $3,058 million, down 11% year over year and also below the Zacks Consensus Estimate of $3,282 million. Quarterly operating income came in at $1,084 million, almost flat year over year.
At the end of the third quarter, Viacom had $421 million of cash & cash equivalents and $12,816 million in outstanding debts on its balance sheet compared with $1,000 million and $12,681, respectively, at the end of fiscal 2014. Meanwhile, the debt-to-capitalization ratio stood at 0.81 versus 0.77 at the end of fiscal 2014.
Media Networks Segment
Quarterly revenues of $2,597 million were flat year over year. Quarterly operating profits came in at $1,114 million, down 1% year over year. Both Affiliated fee and ancillary revenues grew 2% and 10%, respectively, on an annualized basis. Also, domestic and worldwide affiliate fee revenues improved 2% triggered by an increase in rates. On the other hand, on a year-over-year basis, domestic advertising revenues fell 9% owing to weaker ratings. Further, worldwide advertising revenues declined by 2%.
Filmed Entertainment Segment
At this segment, quarterly revenues fell a considerable 44% year over year to $479 million, mainly on account of a 92% drop in Global Theatrical revenues and 30% fall in home entertainment business revenues. Likewise, TV license fees deteriorated 6% year over year. Quarterly operating income stood at $48 million, highlighting a 13% deterioration from the year-ago figure. Also, ancillary revenues declined 30% year over year.
Our Take
Comcast Corp. CMCSA-owned Universal Pictures has so far been dominating the 2015 U.S. box office with a 28.4% market share. The significant market hold mainly came on the back of successes like Jurassic World and Furious 7. Meanwhile, The Walt Disney Co’.s DIS Buena Vista studio owned a 20.2% share in 2015 driven by the hits like Avengers: Age of Ultron and Inside Out. Likewise, Time Warner Inc’.s TWX Warner Bros. has been enjoying the third spot this year with a 17.3% share.
On the other hand, Paramount held a meager 5.5% market share in 2015 owing to lack of hit movie releases. However, the recent launch of Mission: Impossible – Rogue Nation by the company’s Film business will certainly boost revenues.
Currently, Viacom carries a Zacks Rank #3 (Hold).
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