Viacom Feels Hit From Cost Of Streaming -- WSJ
Media giant's profit falls as it ramps up spending on services
ahead of CBS merger
By Benjamin Mullin and Allison Prang
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (November 15, 2019).
Viacom Inc.'s profit fell in the last quarter of its fiscal year
as lower revenue and increased investment in new online streaming
services weighed on its bottom line.
Profit at the media company -- whose portfolio includes TV Land,
VH1 and MTV -- fell 22% from a year earlier to $307 million.
Per-share earnings slid to 76 cents, down from 98 cents.
On an adjusted basis, profit totaled 79 cents a share, down from
99 cents a share a year earlier. Analysts polled by FactSet were
expecting 76 cents a share in adjusted earnings.
Revenue was $3.43 billion, down 1.5%, but still slightly higher
than analysts' consensus estimate. Total expenses rose 2.3%.
The company said the biggest factors in decreased profitability
were investments in Pluto TV, its advertising-supported streaming
service and one-time marketing expenses for the launch of BET+, a
subscription video service launched earlier this year. The company
said Pluto TV has reached 20 million monthly active users.
Revenue at the company's Paramount movie studio decreased 72% to
$94 million, largely the result of a comparison to last year's
summer blockbuster "Mission: Impossible -- Fallout."
On an earnings conference call Thursday, Viacom Chief Executive
Bob Bakish said that the Paramount movie studio was profitable for
the first time in four years, thanks in part to increased licensing
and production deals with major video-streaming companies. Mr.
Bakish said that Paramount licensed the rights to "Beverly Hills
Cop," the 1984 action comedy film starring Eddie Murphy, to Netflix
On Wednesday, Viacom announced that it struck a deal with
Netflix to provide new content from its Nickelodeon Animation
Studio based on some of its most popular characters, including
Both deals with Netflix are in keeping with Viacom's strategy to
feed major streaming services rather than attempting to build rival
general-interest subscription streaming services in-house.
Also on the call, Mr. Bakish said the company returned to
full-year growth for its U.S. advertising and U.S. affiliate sales
businesses, two of its most important revenue streams.
"These are significant achievements, particularly in this
dynamic media environment," Mr. Bakish said. "What is perhaps most
important is that all of this reflects the delivery of promises we
made to you, our investor base."
Viacom is combining with CBS Corp, and both media companies have
been consolidating some of their operations. CBS reported earnings
earlier this week and logged lower profit, hurt by merger costs and
higher programming expenses. Wall Street hasn't reacted well to the
merger, with Viacom and CBS shares down more than 20% since the
Mr. Bakish said on the call that Viacom and CBS planned to close
their merger in early December and are drafting plans for the
combined company. He said the new company plans to combine its
affiliate sales teams and come up with a cohesive plan for its
direct-to-consumer streaming services.
Write to Benjamin Mullin at Benjamin.Mullin@wsj.com and Allison
Prang at firstname.lastname@example.org
(END) Dow Jones Newswires
November 15, 2019 02:47 ET (07:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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