Tue, Jul 28, 2009 | 18:58 BST
Viacom revenues down due to decline in Rock Band sales
MTV and Harmonix’s parent company, Viacom, has reported that sales of the Rock Band franchise are down this quarter “due to the soft retail environment”, which has directly impacted revenues for the company.
Q2 revenue dropped 8 percent to $1.97 billion with a 41 percent decline in revenue blamed on poor sales of Rock Band which saw a 12 percent decline in profit to $671 million in the Media Networks division.
Besides the “soft retail environment”, the loss was also attributed to lower advertising revenues and $16 million in severance charges.
Overall, quarterly revenues dropped 14 percent to $3.3 billion, and profit dropped 26 percent to $586 million.
Chief exec Philippe Dauman assured shareholders that the decline is “short-term”, and with Viacom’s “aggressive” cost management and the pending launch of The Beatles: Rock Band in September, a “brighter future” is in the cards.
More through the press release below.
NEW YORK, July 28 /PRNewswire-FirstCall/ — Viacom Inc. (NYSE: VIA and VIA.B) today reported financial results for the second quarter ended June 30, 2009.
Revenues for the second quarter of 2009 totaled $3.30 billion, a 14% decline from $3.86 billion in the second quarter of 2008. This decrease reflects lower revenues in both the Media Networks and Filmed Entertainment segments as weak economic conditions continued to impact certain business sectors. Operating income declined 26% to $586 million primarily as a result of lower year-over-year revenues, which more than offset a $352 million net reduction in expenses in the quarter. Excluding the impact of Media Networks and Filmed Entertainment severance charges, adjusted operating income decreased 22% to $619 million. Reported net earnings attributable to Viacom declined 32% versus a year ago to $277 million, or 27% on an adjusted basis. Excluding $0.03 in severance charges, adjusted diluted earnings per share (EPS) were $0.49, a 23% decline versus the second quarter of 2008. The adjustments are detailed in the Supplemental Disclosures at the end of this release.
Sumner M. Redstone, Executive Chairman of Viacom, said, “As the leading pure-play content company, Viacom has the right portfolio of assets and the right vision to manage through this challenging climate while we continue to position ourselves for future growth.”
Philippe Dauman, President and Chief Executive Officer of Viacom, said, “While the global economy continued to be a challenge in the second quarter, the diversity of our revenue streams, sequential improvement in our domestic advertising sales, our generation of cash and our operational discipline all helped to temper the short-term impact. As we look to a longer-term recovery, we continue to manage costs aggressively and make changes in the business that will better position Viacom for growth. Importantly, our efforts to reinvigorate our cable networks’ creative machine are generating positive results, with ratings trends improving across our key networks and record-breaking results for several of our tentpole events, including the MTV Movie Awards and BET Awards ‘09.
“Paramount Pictures’ performance in the second quarter was highlighted by the box office success of its tentpole films STAR TREK and Transformers: Revenge of the Fallen. Both films are unqualified blockbusters that will generate substantial profit as they move through their windows.”
Second Quarter 2009 revenues of $3.30 billion declined 14% from $3.86 billion in 2008. Media Networks revenues decreased 8% to $1.97 billion, principally due to a 41% decline in ancillary revenues driven by lower sales of the music video game Rock Band. Domestic advertising revenues decreased 6%, which represents a 3-percentage point sequential improvement over the first quarter 2009 results. Worldwide advertising revenues were down 8%, reflecting continued softness in the international advertising marketplace. Worldwide affiliate revenues grew 9%, including double-digit growth in the U.S. Filmed Entertainment revenues decreased 22% to $1.38 billion, primarily due to lower theatrical and home entertainment revenues. The strong box office performance of Star Trek and the first seven days of Transformers: Revenge of the Fallen was not enough to surpass the results of Iron Man and Indiana Jones and the Kingdom of the Crystal Skull in the second quarter of 2008, which resulted in a 27% decline in theatrical revenues to $584 million. Home entertainment revenues were down 29% to $435 million. This result reflects a difficult comparison with the strong sales of the Indiana Jones trilogy on DVD in the prior year as well as ongoing softness in the overall retail sector. Television license fees were up 5% to $314 million in the second quarter.
Second Quarter 2009 operating income decreased 26% to $586 million, including the impact of $33 million in severance charges, compared with $792 million in the second quarter of 2008. Media Networks operating income declined 12% to $671 million, reflecting lower advertising revenues, losses associated with Rock Band due to the soft retail environment and $16 million in severance charges. The Filmed Entertainment segment had an operating loss of $25 million, including the impact of $17 million in severance charges, versus an operating profit of $86 million in the prior year. This decline reflects the underperformance of certain theatrical releases, lower home entertainment profits and the timing of the theatrical release of Transformers: Revenge of the Fallen late in the quarter.
Second Quarter 2009 net earnings attributable to Viacom decreased $130 million, or 32%, to $277 million, principally due to lower operating income and increased foreign exchange losses, partially offset by a lower effective tax rate and lower interest expense. Excluding the $21 million after-tax impact of severance charges, adjusted net earnings attributable to Viacom were $298 million, down 27% versus the prior year. Adjusted diluted earnings per share for the quarter were $0.49, a 23% decline from diluted EPS of $0.64 in the second quarter of 2008.
At June 30, 2009, total debt outstanding, including capital lease obligations, decreased to $7.37 billion, compared with $8.00 billion at December 31, 2008. The Company’s cash balances decreased to $250 million at June 30, 2009 compared with $792 million at December 31, 2008.
Viacom, consisting of BET Networks, MTV Networks and Paramount Pictures, is the world’s leading entertainment content company. It engages audiences on television, motion picture and digital platforms through many of the world’s best known entertainment brands, including MTV, VH1, CMT, Logo, Nickelodeon, Nick at Nite, Noggin, COMEDY CENTRAL, Spike TV, TV Land, BET, Rock Band, AddictingGames, Atom, Neopets, Shockwave and Paramount Pictures. Viacom’s global reach includes approximately 170 channels and 400 online properties in 163 countries and territories.