Viacom Profits Bolstered By Deals With Netflix and Others
Viacom (NYSE:VIA) reported its second quarter earnings last week and topped expectations in terms of earnings and revenues. The company joins CBS (NYSE:CBS) as another major broadcast media company to report an outstanding fiscal quarter. It seems that the two network owners have something else in common, according to AllthingsD, which is the amount of money they are raking in from licensing deals with digital media distributors. Digital distributors, such as Netflix (NASDAQ:NFLX), Hulu, and others, were willing to fork over the dough for rights to stream shows like Viacom’s “The Jersey Shore” or CBS’ “2.5 Men.” CEO Philippe Dauman attributed a “substantial bump” in revenue growth to proceeds from such deals.
Even though the deals only accounted for $70 million of the company’s total $2.4 billion in revenue,”digital dollars are exceptionally profitable — Dauman said the margin on those deals was upwards of 75 percent. And Dauman and his lieutenants took great pains to stress that they’d be signing up new digital pacts, both in and outside the U.S.”
This is a best-case scenario income model for TV network owners like Viacom, because it proves that internet tv watchers are still more likely to pay for or re-view digital content on a licensed website rather than pirating. This means that networks will be able to profit off shows by selling them to cable and satellite companies such as Cablevision (NYSE:CVC), and DISH Network (NASDAQ:DISH), and then re-selling them to digital providers like Hulu after they air.