MUMBAI: US media conglomerate Viacom has reported financial results for the second quarter and six months ended 30 June 2006. For the quarter, revenues and operating income increased to $2.85 billion and $663.2 million, respectively.
Viacom executive chairman Sumner M. Redstone says, “Viacom’s solid second quarter results prove that the enduring strengths of our content and our segment leading brands continue to resonate with consumers and advertisers. We have a great foundation from which to take full advantage of the growth opportunities we see ahead by not only expanding on our traditional businesses, but also by profitably integrating new platforms with significant future growth potential.
"Equally important, Tom Freston and the Viacom management team have an unmatched track record of repeatedly and successfully leveraging emerging technologies, which gives us great confidence that we can continue to outperform the competition in this rapidly changing environment.”
The acquisition of DreamWorks and the commencement of distribution activities for DreamWorks Animation and DreamWorks live-action library filmscontributed $345.1 million or 63% of the reported growth versus last year. The cable networks segment revenues increased 8% to $1.75 billion, with domestic ad revenues was up 10 per cent to $969.1 million, and affiliate fees up 11% to $501.8 million. Entertainment revenues were up a reported $418.4 million in the quarter principally attributable to DreamWorks.
The company reaffirms its full year guidance to deliver double digit revenue and operating income growth compared to 2005 revenues of $9.61 billion
In the cable network segment, affiliate revenue growth was driven by rate and subscriber increases as well as new channel launches in international markets. Ancillary revenues were relatively flat as increases attributable to syndication were substantially offset by decreases of Comedy Central home video sales, which benefited in 2005 from the release of The Chappelle Show.
Domestic revenues increased by nine per cent in the quarter with advertising revenues up 10 per cent (compared to a six per cent increase in the first quarter of 2006). International revenues were up four per cent in the quarter including $5.8 million in incremental revenues related to a UK acquisition. International advertising revenues declined 2% (compared to a 13% decline in the first quarter of 2006) or $2.1 million, driven principally by continued softness in Germany and the UK.
Affiliate revenues were up 13% internationally driven by the UK acquisition and new channel launches. International ancillary revenues increased. The increase in operating expenses in the cable networks segment reflects an aggregate eight per cent increase in programming and production costs on shows such as The Colbert Report, The Daily Show at Comedy Central, and VH1 Rock Honours. This was partially offset by the non-renewal of the WWE package at Spike TV, The Chappelle Show, and the one time special VH1’s Save the Music.
Television license fees increased $207.3 million including increases in DreamWorks related distribution revenues of $108.9 million. In addition total international revenues were higher due to the number and mix of available titles which included SpongeBob SquarePants, Without a Paddle and The Manchurian Candidate.
Movie revenues increased $168.7 million in the second quarter principally as a result of revenues related to the distribution of DreamWorks Animation’s Over the Hedge. In addition, international theatrical revenues benefitted from the release of Mission: Impossible III and Failure to Launch in comparison to War of the Worlds and Sahara in theaters during 2005.
The increase in ancillary revenues of $32.9 million was principally driven by studio rental income as well as increased music royalties earned by Famous Music. On a geographic basis, domestic revenues increased $190.5 million or 39 per cent substantially all of which is attributable to DreamWorks, offset by lower theatrical and home entertainment revenue for Paramount titles.
International revenues increased $227.9 million, or 106 per cent driven principally by theatrical and television revenues. Higher international theatrical revenues, principally driven by Mission: Impossible III and Failure to Launch contributed an incremental $110.2 million of revenue as compared to titles in release in 2005 which included War of the Worlds and Sahara.
International television revenues, which increased $121.5 million, benefited from additional mix of such titles as Manchurian Candidate and SpongeBob SquarePants as well as titles distributed for DreamWorks such as Shark Tale and Meet the Fockers. Home entertainment revenues declined by sevent per cent, or $8.4 million internationally due to weaker international performance of recently released titles as compared against SpongeBob SquarePants and Team America in the prior year.
