Viacom 2Q profit jumps on cost cutting at Paramount, growth at cable channels

Viacom profit jumps on cost cutting, cable revenue

NEW YORK — Viacom Inc.’s second-quarter profit jumped almost 52 percent, boosted by cost-cutting at its Paramount Pictures film studio and higher revenue from its cable channels.

The results, released Thursday, marked a full year of rising profits for Viacom. Coming out of a recession that put a huge dent in the budgets companies have for spending on TV ads, Viacom has been looking to boost ratings at its cable channels while paring back new film releases to save cash.

The strategy has paid off so far. Viacom, which is controlled by billionaire Sumner Redstone, was able to declare its first-ever quarterly dividend in June. And it ended the quarter with more than double the amount of cash it had at the end of 2009.

Viacom is riding an industrywide rebound in advertising. The company, which operates cable channels including BET, MTV, Comedy Central and Nickelodeon, said Thursday that both domestic and international ad revenue climbed 4 percent from the same quarter a year ago.

The same trend has played out at other big media companies. Time Warner Inc., News Corp. and CBS Corp. all reported growing ad revenue this week for the most recent quarter.

Viacom’s results weren’t upbeat enough to lift the company’s share price. Its Class B shares slipped 17 cents to $33.85 in morning trading Thursday.

Overall revenue was flat at $3.3 billion, slightly bellow the average forecast from analysts of $3.4 billion.

That overshadowed net income of $420 million, or 69 cents per share, which was up from $277 million, or 46 cents per share, a year ago. On average, analysts surveyed by Thomson Reuters expected earnings of 66 cents per share.

The revenue shortfall came mainly from a drop in DVD sales, hurt by still-sluggish consumer spending and the growing availability of television and movies on the Web.

Film revenue slipped 10 percent to $1.25 billion, led by a 43 percent drop in home entertainment revenue.

To boost profits, Viacom’s Paramount film studio has focused on a smaller slate of films, which included “Iron Man 2″ and “Shrek Forever After” in the second quarter. The film unit booked a $69 million profit, reversing an $8 million loss in the same quarter a year ago.

Revenue climbed 6 percent to $2.09 billion at its cable channels. Cable profits climbed 14 percent to $789 million.

While Viacom is certainly benefiting from a broad recovery in ad markets, the company also pointed to gains it has made in television ratings. On a call with analysts, CEO Philippe Dauman said the season premiere of “Jersey Shore” drew an audience of more than 5 million and was the best rated season premiere of any show on MTV in seven years.