The FINANCIAL — Viacom Inc. on August 4 reported financial results for the third quarter of fiscal 2016 ended June 30, 2016.
Philippe Dauman, Executive Chairman, President and Chief Executive Officer of Viacom, said, “In the quarter, Viacom continued to execute on our strategic plan by increasing investment in high-quality original content, enhancing our connection to audiences, accelerating the growth of data-driven advertising products and further expanding our unmatched global reach. Ratings increased at several of Viacom’s major networks, including Nickelodeon, Nick at Nite, VH1 and TV Land, and ratings trends at nearly all of our networks showed sequential improvement as we successfully completed a very strong upfront across our brands. Internationally, our media networks are driving strong double-digit revenue growth, with new channel launches, growing distribution partnerships and substantial ad sales gains. Viacom’s third quarter results were impacted by the underperformance of Teenage Mutant Ninja Turtles: Out of the Shadows.”
Quarterly revenues increased 2% to $3.11 billion, as Filmed Entertainment gains more than offset a decrease in Media Networks revenues. Media Networks revenues were $2.51 billion, a decline of 3%. Domestic advertising revenues decreased 4%, as pricing increases were more than offset by softer ratings at some of our networks compared to the previous year, and a continuing strategic reduction of unit loads. International advertising revenues increased 13%, driven principally by growth in Europe. Absent an adverse 6% impact of foreign exchange, international advertising revenues increased 19%. Domestic affiliate revenues decreased 10%, principally reflecting a difficult comparison with the timing of revenues from certain distribution agreements in the prior year. International affiliate revenues increased 9%, and absent an adverse 3% impact of foreign exchange, international affiliate revenues increased 12%, according to Viacom.
Filmed Entertainment revenues grew 30% to $621 million, driven by gains in license fees and theatrical revenues. Worldwide theatrical revenues increased to $91 million in the quarter, reflecting the June release of Teenage Mutant Ninja Turtles: Out of the Shadows. License fees grew 39% to $297 million in the quarter, driven by the licensing of certain titles for subscription video-on-demand services and revenues from Paramount Television productions.
Quarterly operating income declined 29% to $769 million. Media Networks adjusted operating income decreased 22% to $872 million, reflecting revenue declines as well as an increase in programming and marketing expenses. Filmed Entertainment reported an adjusted operating loss of $26 million, reflecting the timing of expenses and theatrical performance in the quarter.
Quarterly net earnings attributable to Viacom decreased to $432 million and adjusted net earnings declined to $419 million. Diluted earnings per share for the quarter were $1.09 and adjusted diluted earnings per share were $1.05.
Debt
At June 30, 2016, total debt outstanding was $12.37 billion, compared with $12.29 billion at September 30, 2015. In the quarter, the Company repaid the $368 million aggregate principal amount of its 6.250% Senior Notes due April 2016. The Company’s cash balances were $192 million at June 30, 2016, a decrease from $506 million at September 30, 2015.
