Viacom beats expectations on profit despite ratings woes

Michelle Clancy ©RapidTVNews | 04-05-2012

Increased revenue from cable network fees and digital licensing helped spur Viacom to better-than-expected fiscal Q2 2012 results.

Profit for the quarter came in at $588 million, up from $376 million a year earlier. Revenue rose 2% to $3.33 billion.

Carriage fee hikes resulted in a rise in cable network revenue of 5%. Content licensing in general went up for Viacom by 15% in the United States and 17% globally thanks to deals with Netflix and other streaming providers.

Meanwhile, advertising revenue only rose by 1% in the U.S. and was globally flat. Investors have been watching Viacom with care as ratings at Nickelodeon and MTV have fallen significantly. Nickelodeon alone has seen a 30% fall-off in ratings this year, according to Nielsen. Some have blamed Viacom's aggressive digital distribution strategy, but execs pointed out that Viacom children's program streaming represents only about 2% of viewing on Nickelodeon, casting the cannibalisation theory into doubt.

Viacom brass seemed to intimate that the rating situation was improving. "We are seeing the strengthening in the overall tone of the marketplace in terms of the (advertising) volume coming into the marketplace that has offset the impact of the ratings deficiencies that we've had primarily on one of our larger channels, and that would be Nickelodeon," said Viacom COOThomas Dooley during the earnings call.