Viacom Plans Direct-to-Consumer Service for Its Cable Channels -- 2nd Update
February 08 2018 - 1:53PM
Dow Jones News
By Keach Hagey and Austen Hufford
Viacom Inc. said Thursday it plans to launch an ad-supported
direct-to-consumer product by September that will offer content
from across its portfolio, including cable channels such as MTV and
Comedy Central.
Viacom executives, who had only hinted vaguely at such plans,
provided details about the service, still in development, during a
conference call to discuss earnings for the December quarter.
The content on the new service will include thousands of hours
of programming Viacom has purposefully chosen not to license to
online-video services.
"It's going to be significant, and it's going to also be
differentiated from what's in the marketplace today," said Viacom
Chief Financial Officer Wade Davis, adding that it was only
possible because "we kind of built and husbanded [our] library to
be able to use for our own strategic purposes."
The quarterly earnings report reflected a company still very
much in the midst of a difficult turnaround. Viacom reported a
deeper-than-expected revenue decline as its television networks in
the U.S., hurt by customers dropping cable TV, saw less advertising
and subscription revenue. Cost cuts and growth in international
markets helped partially offset those declines.
Despite the challenges, Mr. Davis hit some bright notes in the
earnings outlook, saying that subscription revenue would decline
"at the low end of mid-single digits" in percentage terms for the
fiscal year ending in September, instead of the earlier projection
of simply a mid-single-digit decline. That is partly because of
better cable TV-carriage contracts.
The company said it expected advertising revenue to return to
growth in the fourth quarter, and overall revenue growth to resume
in the next fiscal year.
Shares in Viacom were up 9% in early afternoon trading.
Investors are watching for a potential merger between Viacom and
CBS Corp, a deal that would reunite the two big pieces of Sumner
Redstone's media empire. Last week the companies disclosed that
their boards had formed a special committee to evaluate a deal.
Viacom said profit in the December quarter was boosted by the
enactment of the new tax law. For its first quarter, Viacom
reported a profit of $537 million, or $1.33 a share, up from $396
million, or $1 a share, a year earlier. Excluding the tax benefit
and other charges, Viacom posted an adjusted profit of $1.03 a
share, beating analysts' estimate of 94 cents a share.
Revenue fell 7.6% to $3.07 billion, below analysts' estimates of
$3.14 billion.
Revenue at the media networks unit that houses Viacom's cable TV
channels fell 1% overall to $2.56 billion. U.S. advertising revenue
decreased 5% to $937 million, due to lower TV ratings, partially
offset by higher pricing and digital ad growth. Domestic
subscription revenue decreased 8% to $907 million.A bright spot was
a 13% increase in international revenue, excluding a favorable
impact from foreign exchange.
Write to Keach Hagey at keach.hagey@wsj.com and Austen Hufford
at austen.hufford@wsj.com
(END) Dow Jones Newswires
February 08, 2018 13:38 ET (18:38 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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