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New Viacom CEO says Paramount turnaround will bolster earnings

Viacom's turnaround of Paramount and the film studio's relatively new television business will drive the company's earnings, new Viacom CEO Bob Bakish said Thursday.

"That business ... is on track to becoming a nice profit contributor to not only Paramount but, obviously, Viacom," Bakish said, speaking exclusively with CNBC's "Squawk on the Street" after Viacom reported its fiscal first quarter earnings.

In a new strategy, Bakish said Viacom will strive to boost its cable franchise business with its announced turnaround of Paramount despite the increasing costs of investing in cable.

"There is no question Paramount had a rough couple of years," Bakish said, adding that the studio was "an integral part of Viacom."

Despite Paramount's improved revenue, the studio reported a wider adjusted operating loss of $180 million for the quarter.

"At the same time, it's an iconic studio, over 100 years old," the CEO said. Viacom's new strategy for Paramount will raise awareness about its upcoming projects via the company's paid brands.

Beyond that, Bakish noted Paramount's relatively recent addition of television production capabilities, which he said will stabilize the brand and create new opportunities going forward.

"A studio with only film production is actually a very volatile animal," he said. "Under Amy Powell's leadership, we have built a very nice and rapidly growing TV production business with a broad range of clients" including Viacom's "flagship brand" Nickelodeon, among other networks.

Powell is president of Paramount's television and digital entertainment division.

"I'm confident that as we turn the page on this new strategy, we will restore Paramount to growth and profitability," Bakish said. "A typical film studio should be in the 8 to 12 percent margin range. I believe we'll get there."

Viacom, owner of MTV, Comedy Central and Nickelodeon, reported better-than-expected quarterly profit, helped by growth in its domestic affiliate and theatrical revenues.

Viacom's film business, which includes theater and licensing, saw revenue increase 24 percent to $758 million from a year earlier.

Analysts had expected revenue of $678.8 million, according to market research firm FactSet StreetAccount.

Viacom's results come as Bakish is focused on turning around the business after years of falling domestic ad revenues and poor ratings as younger viewers increasingly watch content online, while Paramount has suffered from a lack of box-office hits.

As part of the strategy, the company said Thursday it would focus its efforts on six "flagship" brands: Nickelodeon, Nick Jr., MTV, Comedy Central, BET and Paramount.

Bakish, who was formerly head of Viacom's international business, became permanent CEO in December after controlling shareholders, the Redstone family, abandoned exploring a merger of Viacom and CBS. Sumner Redstone and his family own a controlling stake in Viacom and CBS through privately held movie theater company, National Amusements.

Viacom's media networks business reported a slight 1 percent rise in revenue to $2.59 billion in the latest quarter. Analysts had expected revenue of $2.54 billion, according to FactSet StreetAccount.

However, net income attributable to Viacom fell to $396 million, or $1 per share, in the quarter ended Dec. 31, from $449 million, or $1.13 per share, a year earlier.

Excluding items, the company earned $1.04 per share, handily beating the analysts' estimate for 84 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 5.39 percent to $3.32 billion.

Analysts on average had expected revenue of $3.18 billion.

Viacom's stock was up 2.5 percent to $43.14 midday Thursday.

— Reuters contributed to this report.