Viacom Inc. (NASDAQ:VIA) — the media company controlled by billionaire Sumner Redstone — depends on its television business for more than 90 percent of its annual operating income, so the 10 percent increase in domestic and worldwide advertising revenue and the 6 percent rise in licensing fees paid by the cable channels that broadcast its shows boosted fourth-quarter earnings. Viacom reported fiscal fourth-quarter earnings before the opening bell on Thursday that beat analyst expectations.
The owner of cable networks MTV and Nickelodeon reported that, excluding some items, earnings came in at $1.55 per share, surpassing the $1.44 per share expected by analysts. Alongside the earnings increase, net income rose 25 percent to $806 million, or $1.69 per share, from $643 million, or $1.24 per share, from a year earlier, while revenue advanced 8.6 percent to $3.65 billion. Comparatively, analysts had estimated $3.59 billion. Media networks revenue grew 7 percent to $2.46 billion, driven by the growth in domestic advertising sales and affiliate fees.
For the full fiscal year, Viacom earned $2.4 billion, or $4.84 per share, up from $1.98 billion, or $3.69 per share in the year-ago quarter, and revenue fell slightly to $13.79 billion from $13.89 billion.
On Wednesday, Wunderlich Securities analyst Matthew Harrigan wrote in a research note acquired by Bloomberg that rating improvements, “especially at Nickelodeon,” are benefiting the company, and Viacom’s fourth-quarter earnings report affirmed that assessment. “We look for continued advertising gains into fiscal 2014 off MTV Networks’ good upfront market and some specific ad category strength relative to youth demographics,” wrote Harrigan, who rated the shares a buy and set a $60 price tag for the company’s stock.
Following the earnings release, Viacom shares dipped 0.06 percent to $82.44 in premarket trading and a further 1.12 percent to $82.23 once the markets opened, a very slight decrease for a stock that has gained 52 percent this year to date and nearly 70 percent in the past 12 months.
Redstone, the company’s executive chairman, said in the earnings press release, “Viacom’s outstanding performance proved once again the broad global demand for our valuable content.” In particular, the popularity of Paramount’s World War Z, the zombie moving starring Brad Pitt, “drove solid returns in the quarter,” and the company is “very optimistic about Paramount’s ambitious pipeline of branded and franchise films,” according to President and CEO Philippe Dauman.
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