As I'd expected, it was a rocking quarter for Viacom : its fourth quarter profit increased more than 16 percent. The two divisions are undergoing a turn around--the media networks division and its movie studio, Paramount--showed strong results. And there's good news for the ad industry as Viacom's CEO Philippe Dauman said the ad economy saw no impact from the economic slowdown. Maybe we don't have to worry about an ad recession?
Viacom's cable TV division--which includes MTV, Comedy Central, Nickelodeon, and other cable channels--showed an 18 percent rise in revenue, on an 11 percent increase in cable and satellite operator fees, and an eight percent increase in ad sales. These channels actually benefited from the Writers Guild Strike as viewers moved away from traditional network programming, looking for something different.
One of the factors helping VH1: shorter ads, called 'pods, 'which keep people from fast-forwarding through, and which remarkably, get people to remember the ad info more. And Viacom pointed out that the types of companies that tend to advertise on its cable networks are generally recession resistant--movie studios, consumer product companies like Coca Cola , low-cost fast food restaurants. So it's not worried about suffering from an ad downturn later this year.
And "Transformers," which came out last summer, is still helping Viacom. The company's DVD sales helped its film entertainment revenues rise 19 percent. Now that Paramount has jumped on the Blu-ray bandwagon and the high def format war battle seems to be over, that should only help the studio's DVD business.
So, what's up for Viacom moving forward? The movie studio seems to be on track with some huge titles coming up, and until 2010, Viacom says it expects profit from operations to increase by low double digit percentages annually.
But all this wasn't enough for investors Friday--the stock as of this posting is now trading down nearly four percent.