Citing huge marketing expenses and the restructuing of its MTV group, Viacom's (VIA-B) quarterly earnings dived by a large 36 percent, according to an AP report. Even with the poor showing the company beat analysts' projections.
This quarter earnings came in at $202.9 million, bringing in 29 cents a share. That was down from the same period last year where they generated $317.2 million, or 43 cents a share.
Advertising costs for the quarter reached $170 million in the U.S. for their film division, while operating income dropped by 29 percent to $442.8, in contrast to 
$623.5 million the same time a year ago. Most of that is attributed to the restructuring of MTV.
This is part of the problem when studios throw all the big numbers around on how much they grossed on their movies. For example, "Blades of Glory" and "Disturbia" bore huge marketing expenses, contributing to the poor quarter.
Overall revenue for the quarter grew by 16 percent, to finish at $2.75 billion.
In contrast to the report on Disney's (DIS) quarterlies, Viacom was late in almost every area that Disney took action in.
Disney cut back on making movies, something Viacom may not even be thinking of. Disney also was the first major media company to embrace the Internet and work with what was the reality at the time, instead of trying to fight everything. The result is a robust internet strategy that's bringing in a lot of revenue for Disney.
On the other hand, MTV has made announcements of a strategy that's more talk at this time the results. Although some of the things they're trying to do sound interesting.
Of course this all goes back to why Philippe Dauman was made CEO because of the slow response to the new media landscape. Now they're paying for it.
Philippe Dauman maintains that the company still believes it can reach the goal of $500 million in revenue for its digital business this year. The bigger problem is how much of that will be profits.
The company may need to make even more cuts than it announced to bring it back to a better performance. At this time they seem to be treading water and hoping to stop the leaks.
Viacom spun off CBS (CBS-A) last year, but still owns Paramount Pictures, DreamWorks, VH1, BET and MTV.
I wish I could make $200 million in 3 months and still have people think that it's not enough. My movies would be much better then the stuff the studios put out.
Posted by: davis freeberg | May 10, 2007 8:52 PM | Permalink to Comment