Viacom Reports Strong Second Quarter Results
Company Delivered Significant Gains in Operating Income, EPS
Worldwide Growth in Media Networks Driven by Double-Digit Gains Across All International Revenue Streams
Paramount Pictures Returned to Profitability in the Quarter as Turnaround Efforts Advance
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20180425005487/en/
Paramount Pictures returned to profitability in the quarter, and continued its momentum in April with box office hit "A
"At Paramount Pictures, turnaround efforts have firmly taken hold as the
studio improved margins and returned to profitability. This month's
outstanding box-office performance of A
"Viacom also took strides to advance its participation into next
generation platforms and solutions. We continued to benefit from growth
in the vMVPD space, delivered revenue gains in Advanced Marketing
Solutions, and significantly increased original content production
through
"Looking forward, we see continued momentum as we pivot from stabilization and revitalization of our business to a new phase of growth."
FISCAL YEAR 2018 RESULTS |
|||||||||||||||||||||||||||||
(in millions, except per share amounts) |
Quarter Ended |
B/(W) |
Six Months Ended |
B/(W) | |||||||||||||||||||||||||
2018 | 2017 |
2018 vs. |
2018 | 2017 |
2018 vs. |
||||||||||||||||||||||||
GAAP |
|||||||||||||||||||||||||||||
Revenues | $ | 3,148 | $ | 3,256 | (3 | )% | $ | 6,221 | $ | 6,580 | (5 | )% | |||||||||||||||||
Operating income | 456 | 332 | 37 | 1,173 | 1,038 | 13 | |||||||||||||||||||||||
Net earnings from continuing operations attributable to |
256 | 121 | 112 | 791 | 517 | 53 | |||||||||||||||||||||||
Diluted EPS from continuing operations | 0.64 | 0.30 | 113 | 1.96 | 1.30 | 51 | |||||||||||||||||||||||
Non-GAAP* |
|||||||||||||||||||||||||||||
Adjusted operating income | $ | 641 | $ | 612 | 5 | % | $ | 1,358 | $ | 1,360 | — | % | |||||||||||||||||
Adjusted net earnings from continuing operations attributable to
|
371 | 317 | 17 | 784 | 730 | 7 | |||||||||||||||||||||||
Adjusted diluted EPS from continuing operations | 0.92 | 0.79 | 16 | 1.95 | 1.83 | 7 | |||||||||||||||||||||||
* Non-GAAP measures referenced in this release are detailed in the Supplemental Disclosures at the end of this release. |
|||||||||||||||||||||||||||||
Revenues in the second fiscal quarter decreased 3% to
MEDIA NETWORKS
Media Networks revenues increased 1% to
Domestic advertising revenues decreased 3% to
Domestic affiliate revenues decreased 4% to
Ancillary revenues grew 30% to
Adjusted operating income for Media Networks decreased 5% to
Performance highlights:
-
Viacom International Media Networks delivered another strong quarter of double-digit revenue and profit gains, while expanding its reach across platforms with new channel launches in theU.K. andPoland , and innovative mobile distribution deals in the Nordics andIndonesia . InJanuary 2018 ,Viacom sold a 1% stake in joint venture Viacom18 to our partner Network18 to further align our operational strengths and position the business for an exciting new wave of growth inIndia . -
Viacom secured distribution of Nickelodeon's Noggin app as one of Amazon's Prime Video Channels. Launching in the third fiscal quarter, this relationship will expand consumer access to Nickelodeon pre-school programming. -
With the newly-created
Viacom Digital Studios , Viacom brands saw year-over-year domestic increases in social video views and minutes viewed by 70% and 78%, respectively. VDS has also led a significant increase in the volume of original content fromMTV ,BET ,Comedy Central and Nickelodeon, with more than 600 hours to be published this year. In April,Viacom renewed its global partnership with Snap to expand its programming slate and increase content forViacom's tentpoles and live events. -
Led by its flagship brands, which grew audience share year-over-year
for the fourth consecutive quarter,
Viacom continued to hold the top share of basic cable viewing in key demos, including Adults 18-34, African Americans and Kids 2-11, among others. -
MTV achieved its third straight quarter of year-over-year growth in primetime audience share and ratings, driven by eight of the top 40 unscripted cable series. The April premiere of Jersey Shore: Family Vacation broke records as the most watched unscripted debut on cable since 2012, with more than 10 million viewers tuning in over its premiere weekend. -
Comedy Central increased audience share year-over-year for the fourth consecutive quarter, finishing as the #1 ad-supported entertainment network in cable among millennial men and growing ratings 20% among women 18-49 - an industry best and the network's biggest quarterly increase in more than a decade. -
BET delivered its third straight quarter of double-digit year-over-year growth in audience share (up 14%) and ratings (up 10%).BET's massive online footprint continued to expand with a 120% increase in views on social platforms, culminating in the first-everBET Social Awards to celebrate the best of the medium. - Paramount Network launched in January as a new home for premium content. Driven by the early success of original miniseries Waco, the network has boosted Live +3 ratings for its original series by 94% since launch.
-
VH1 , CMT andTV Land continued their winning streaks, growing year-over-year audience share and ratings in the quarter.VH1 has now delivered 11 consecutive quarters of year-over-year ratings improvement whileTV Land and CMT each recorded their highest-rated quarters in four years.
FILMED ENTERTAINMENT
Performance highlights:
- Paramount Pictures returned to profitability in the quarter, and is on track to continue growing profits for the second half of fiscal 2018 and into fiscal 2019. The studio continued to advance its turnaround and improve margins through a modified release strategy that guided the successful release of The Cloverfield Paradox and the sale of international distribution rights of Annihilation.
-
The success of A
Quiet Place , the first film produced and released underParamount's new management team, illustrates continued momentum at the studio. The film, which debuted in April, grossed more than$50 million domestically in its first weekend -Paramount's biggest opening since 2016. The film, which cost approximately$20 million to produce, has grossed more than$200 million globally. -
Upcoming theatrical releases in the fiscal year include
Book Club and Mission: Impossible - Fallout, with Overlord and Bumblebee scheduled for 2019. Paramount Players also continued to build up its 2019 slate of branded films, includingBET's What Men Want,MTV's psychological horror film Eli and an upcoming comedy fromTyler Perry . -
Paramount Television delivered another strong performance this
quarter, driving increased licensing revenues with the release of
TNT's The Alienist, which drew 13 million viewers in its
premiere, ranking as this season's #1 new cable drama series in Live
+3. Upcoming Paramount Television series premieres include season
three of Shooter on
USA and the highly-anticipatedTom Clancy's Jack Ryan on Amazon, with 15 more series ordered or in production. -
The studio continued its efforts to diversify beyond its core
businesses; in April, the stage adaptation of Mean Girls opened
on
Broadway to rave reviews, and the studio recently completed license agreements with developers of theme parks in theMiddle East andChina .
BALANCE SHEET AND LIQUIDITY
In the six months ended
The Company's cash balance was
About
For more information about
Cautionary Statement Concerning Forward-Looking Statements
This news release contains both historical and forward-looking
statements. All statements that are not statements of historical fact
are, or may be deemed to be, forward-looking statements. Forward-looking
statements reflect our current expectations concerning future results,
objectives, plans and goals, and involve known and unknown risks,
uncertainties and other factors that are difficult to predict and which
may cause future results, performance or achievements to differ. These
risks, uncertainties and other factors include, among others: the public
acceptance of our brands, programs, motion pictures and other
entertainment content on the various platforms on which they are
distributed; technological developments, alternative content offerings
and their effects in our markets and on consumer behavior; the potential
for loss of carriage or other reduction in the distribution of our
content; significant changes in our senior leadership and the ability of
our strategic initiatives to achieve their operating objectives; various
uncertainties and risks related to a potential combination with CBS
Corporation, including that an agreement may or may not be reached or
may take an uncertain amount of time, and that the effect of any
potential transaction on
|
|||||||||||||||||||||
CONSOLIDATED STATEMENTS OF EARNINGS |
|||||||||||||||||||||
(Unaudited) |
|||||||||||||||||||||
Quarter Ended |
Six Months Ended |
||||||||||||||||||||
(in millions, except per share amounts) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||
Revenues | $ | 3,148 | $ | 3,256 | $ | 6,221 | $ | 6,580 | |||||||||||||
Expenses: | |||||||||||||||||||||
Operating | 1,681 | 1,944 | 3,244 | 3,763 | |||||||||||||||||
Selling, general and administrative | 771 | 748 | 1,511 | 1,449 | |||||||||||||||||
Depreciation and amortization | 55 | 58 | 108 | 114 | |||||||||||||||||
Restructuring and related costs | 185 | 174 | 185 | 216 | |||||||||||||||||
Total expenses | 2,692 | 2,924 | 5,048 | 5,542 | |||||||||||||||||
Operating income | 456 | 332 | 1,173 | 1,038 | |||||||||||||||||
Interest expense, net | (143 | ) | (158 | ) | (290 | ) | (314 | ) | |||||||||||||
Equity in net earnings of investee companies | 2 | 18 | 3 | 31 | |||||||||||||||||
Other items, net | (28 | ) | (38 | ) | (6 | ) | (35 | ) | |||||||||||||
Earnings from continuing operations before provision for income taxes | 287 | 154 | 880 | 720 | |||||||||||||||||
Provision for income taxes | (23 | ) | (26 | ) | (65 | ) | (184 | ) | |||||||||||||
Net earnings from continuing operations | 264 | 128 | 815 | 536 | |||||||||||||||||
Discontinued operations, net of tax | 10 | — | 12 | — | |||||||||||||||||
Net earnings ( |
274 | 128 | 827 | 536 | |||||||||||||||||
Net earnings attributable to noncontrolling interests | (8 | ) | (7 | ) | (24 | ) | (19 | ) | |||||||||||||
Net earnings attributable to |
$ | 266 | $ | 121 | $ | 803 | $ | 517 | |||||||||||||
Amounts attributable to |
|||||||||||||||||||||
Net earnings from continuing operations | $ | 256 | $ | 121 | $ | 791 | $ | 517 | |||||||||||||
Discontinued operations, net of tax | 10 | — | 12 | — | |||||||||||||||||
Net earnings attributable to |
$ | 266 | $ | 121 | $ | 803 | $ | 517 | |||||||||||||
Basic earnings per share attributable to |
|||||||||||||||||||||
Continuing operations | $ | 0.64 | $ | 0.30 | $ | 1.97 | $ | 1.30 | |||||||||||||
Discontinued operations | 0.02 | — | 0.03 | — | |||||||||||||||||
Net earnings | $ | 0.66 | $ | 0.30 | $ | 2.00 | $ | 1.30 | |||||||||||||
Diluted earnings per share attributable to |
|||||||||||||||||||||
Continuing operations | $ | 0.64 | $ | 0.30 | $ | 1.96 | $ | 1.30 | |||||||||||||
Discontinued operations | 0.02 | — | 0.03 | — | |||||||||||||||||
Net earnings | $ | 0.66 | $ | 0.30 | $ | 1.99 | $ | 1.30 | |||||||||||||
Weighted average number of common shares outstanding: | |||||||||||||||||||||
Basic | 402.6 | 398.2 | 402.5 | 397.6 | |||||||||||||||||
Diluted | 402.9 | 399.5 | 402.7 | 398.7 | |||||||||||||||||
Dividends declared per share of Class A and Class B common stock | $ | 0.20 | $ | 0.20 | $ | 0.40 | $ | 0.40 | |||||||||||||
|
|||||||||||
CONSOLIDATED BALANCE SHEETS |
|||||||||||
(Unaudited) |
|||||||||||
(in millions, except par value) |
|
|
|||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 417 | $ | 1,389 | |||||||
Receivables, net | 3,034 | 2,970 | |||||||||
Inventory, net | 965 | 919 | |||||||||
Prepaid and other assets | 661 | 523 | |||||||||
Total current assets | 5,077 | 5,801 | |||||||||
Property and equipment, net | 908 | 978 | |||||||||
Inventory, net | 4,012 | 3,982 | |||||||||
|
11,724 | 11,665 | |||||||||
Intangibles, net | 325 | 313 | |||||||||
Other assets | 948 | 959 | |||||||||
Total assets | $ | 22,994 | $ | 23,698 | |||||||
LIABILITIES AND EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 300 | $ | 431 | |||||||
Accrued expenses | 707 | 869 | |||||||||
Participants' share and residuals | 811 | 825 | |||||||||
Program obligations | 678 | 712 | |||||||||
Deferred revenue | 346 | 463 | |||||||||
Current portion of debt | 15 | 19 | |||||||||
Other liabilities | 471 | 434 | |||||||||
Total current liabilities | 3,328 | 3,753 | |||||||||
Noncurrent portion of debt | 10,069 | 11,100 | |||||||||
Participants' share and residuals | 343 | 384 | |||||||||
Program obligations | 518 | 477 | |||||||||
Deferred tax liabilities, net | 315 | 294 | |||||||||
Other liabilities | 1,303 | 1,323 | |||||||||
Redeemable noncontrolling interest | 264 | 248 | |||||||||
Commitments and contingencies | |||||||||||
|
|||||||||||
Class A common stock, par value |
— | — | |||||||||
Class B common stock, par value |
— | — | |||||||||
Additional paid-in capital | 10,147 | 10,119 | |||||||||
|
(20,580 | ) | (20,590 | ) | |||||||
Retained earnings | 17,762 | 17,124 | |||||||||
Accumulated other comprehensive loss | (549 | ) | (618 | ) | |||||||
Total |
6,780 | 6,035 | |||||||||
Noncontrolling interests | 74 | 84 | |||||||||
Total equity | 6,854 | 6,119 | |||||||||
Total liabilities and equity | $ | 22,994 | $ | 23,698 | |||||||
|
|||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||||||
(Unaudited) |
|||||||||||
Six Months Ended |
|||||||||||
(in millions) | 2018 | 2017 | |||||||||
OPERATING ACTIVITIES | |||||||||||
Net earnings ( |
$ | 827 | $ | 536 | |||||||
Discontinued operations, net of tax | (12 | ) | — | ||||||||
Net earnings from continuing operations | 815 | 536 | |||||||||
Reconciling items: | |||||||||||
Depreciation and amortization | 108 | 114 | |||||||||
Feature film and program amortization | 2,245 | 2,312 | |||||||||
Equity-based compensation | 35 | 50 | |||||||||
Equity in net earnings and distributions from investee companies | 2 | (5 | ) | ||||||||
Deferred income taxes | (11 | ) | (150 | ) | |||||||
Operating assets and liabilities, net of acquisitions: | |||||||||||
Receivables | (56 | ) | (199 | ) | |||||||
Production and programming | (2,376 | ) | (2,048 | ) | |||||||
Accounts payable and other current liabilities | (467 | ) | (258 | ) | |||||||
Other, net | 4 | 53 | |||||||||
Net cash provided by operating activities | 299 | 405 | |||||||||
INVESTING ACTIVITIES | |||||||||||
Acquisitions and investments, net | (71 | ) | (343 | ) | |||||||
Capital expenditures | (64 | ) | (95 | ) | |||||||
Proceeds from asset sales | 44 | 108 | |||||||||
Proceeds from grantor trusts | 4 | 49 | |||||||||
Net cash used in investing activities | (87 | ) | (281 | ) | |||||||
FINANCING ACTIVITIES | |||||||||||
Borrowings | — | 2,569 | |||||||||
Debt repayments | (1,000 | ) | (2,300 | ) | |||||||
Dividends paid | (161 | ) | (159 | ) | |||||||
Exercise of stock options | 2 | 115 | |||||||||
Other, net | (53 | ) | (34 | ) | |||||||
Net cash provided by/(used in) financing activities | (1,212 | ) | 191 | ||||||||
Effect of exchange rate changes on cash and cash equivalents | 28 | (23 | ) | ||||||||
Net change in cash and cash equivalents | (972 | ) | 292 | ||||||||
Cash and cash equivalents at beginning of period | 1,389 | 379 | |||||||||
Cash and cash equivalents at end of period | $ | 417 | $ | 671 | |||||||
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
The following tables reconcile our results for the quarter and six
months ended
(in millions, except per share amounts) | ||||||||||||||||||||||||||
Quarter Ended |
||||||||||||||||||||||||||
Operating |
Earnings from |
Provision for |
Net Earnings
Attributable to |
Diluted EPS |
||||||||||||||||||||||
Reported results (GAAP) | $ | 456 | $ | 287 | $ | 23 | $ | 256 | $ | 0.64 | ||||||||||||||||
Factors Affecting Comparability: | ||||||||||||||||||||||||||
Restructuring and related costs (2) | 185 | 185 | 44 | 141 | 0.35 | |||||||||||||||||||||
Gain on asset sale (3) | — | (16 | ) | — | (16 | ) | (0.04 | ) | ||||||||||||||||||
Investment impairments (4) | — | 46 | 10 | 36 | 0.09 | |||||||||||||||||||||
Discrete tax benefit (5) | — | — | 46 | (46 | ) | (0.12 | ) | |||||||||||||||||||
Adjusted results (Non-GAAP) | $ | 641 | $ | 502 | $ | 123 | $ | 371 | $ | 0.92 | ||||||||||||||||
(in millions, except per share amounts) | ||||||||||||||||||||||||||
Six Month Ended
|
||||||||||||||||||||||||||
Operating |
Earnings from |
Provision for |
Net Earnings |
Diluted EPS |
||||||||||||||||||||||
Reported results (GAAP) | $ | 1,173 | $ | 880 | 65 | $ | 791 | $ | 1.96 | |||||||||||||||||
Factors Affecting Comparability: | ||||||||||||||||||||||||||
Restructuring and related costs (2) | 185 | 185 | 44 | 141 | 0.35 | |||||||||||||||||||||
Gain on extinguishment of debt (6) | — | (25 | ) | (6 | ) | (19 | ) | (0.05 | ) | |||||||||||||||||
Gain on asset sale (3) | — | (16 | ) | — | (16 | ) | (0.04 | ) | ||||||||||||||||||
Investment impairments (4) | — | 46 | 10 | 36 | 0.09 | |||||||||||||||||||||
Discrete tax benefit (5) | — | — | 149 | (149 | ) | (0.36 | ) | |||||||||||||||||||
Adjusted results (Non-GAAP) | $ | 1,358 | $ | 1,070 | $ | 262 | $ | 784 | $ | 1.95 | ||||||||||||||||
(in millions, except per share amounts) | ||||||||||||||||||||||||||
Quarter Ended |
||||||||||||||||||||||||||
Operating |
Earnings from |
Provision for |
Net Earnings |
Diluted EPS |
||||||||||||||||||||||
Reported results (GAAP) | $ | 332 | $ | 154 | $ | 26 | $ | 121 | $ | 0.30 | ||||||||||||||||
Factors Affecting Comparability: | ||||||||||||||||||||||||||
Restructuring and programming charges (7) | 280 | 280 | 100 | 180 | 0.45 | |||||||||||||||||||||
Loss on extinguishment of debt (8) | — | 30 | 10 | 20 | 0.05 | |||||||||||||||||||||
Discrete tax benefit (9) | — | — | 4 | (4 | ) | (0.01 | ) | |||||||||||||||||||
Adjusted results (Non-GAAP) | $ | 612 | $ | 464 | $ | 140 | $ | 317 | $ | 0.79 | ||||||||||||||||
(in millions, except per share amounts) | ||||||||||||||||||||||||||
Six Months Ended
|
||||||||||||||||||||||||||
Operating |
Earnings from |
Provision for |
Net Earnings |
Diluted EPS |
||||||||||||||||||||||
Reported results (GAAP) | $ | 1,038 | $ | 720 | $ | 184 | $ | 517 | $ | 1.30 | ||||||||||||||||
Factors Affecting Comparability: | ||||||||||||||||||||||||||
Restructuring and programming charges (7) | 322 | 322 | 114 | 208 | 0.52 | |||||||||||||||||||||
Loss on extinguishment of debt (8) | — | 36 | 12 | 24 | 0.06 | |||||||||||||||||||||
Discrete tax benefit (9) | — | — | 19 | (19 | ) | (0.05 | ) | |||||||||||||||||||
Adjusted results (Non-GAAP) | $ | 1,360 | $ | 1,078 | $ | 329 | $ | 730 | $ | 1.83 | ||||||||||||||||
(1) The tax impact has been calculated by applying the tax rates applicable to the adjustments presented.
(2) During the quarter ended
(3) We completed the sale of a 1% equity interest in Viacom18 to our
joint venture partner for
(4) We recognized a
(5) The net discrete tax benefit in the quarter ended
(6) We redeemed senior notes and debentures totaling
(7) We recognized pre-tax restructuring and programming charges of
(8) We redeemed senior notes totaling
(9) The net discrete tax benefit in the quarter ended
The following table includes a reconciliation of net cash provided by operating activities (GAAP) to free cash flow and operating free cash flow (non-GAAP). We define free cash flow as net cash provided by operating activities minus capital expenditures, as applicable. We define operating free cash flow as free cash flow, excluding the impact of the cash premium on the extinguishment of debt, as applicable. Free cash flow and operating free cash flow are non-GAAP measures. Management believes the use of these measures provides investors with an important perspective on, in the case of free cash flow, our liquidity, including our ability to service debt and make investments in our businesses, and, in the case of operating free cash flow, our liquidity from ongoing activities.
Reconciliation of net cash provided by operating activities
to free cash flow and operating free cash flow (in millions) |
Quarter Ended |
Better/ (Worse) |
Six Months Ended |
Better/ (Worse) |
|||||||||||||||||||||||||||
2018 | 2017 | $ | 2018 | 2017 | $ | ||||||||||||||||||||||||||
Net cash provided by operating activities (GAAP) | $ | 287 | $ | 246 | $ | 41 | $ | 299 | $ | 405 | $ | (106 | ) | ||||||||||||||||||
Capital expenditures | (36 | ) | (43 | ) | 7 | (64 | ) | (95 | ) | 31 | |||||||||||||||||||||
Free cash flow (Non-GAAP) | 251 | 203 | 48 | 235 | 310 | (75 | ) | ||||||||||||||||||||||||
Debt retirement premium | — | 27 | (27 | ) | — | 33 | (33 | ) | |||||||||||||||||||||||
Operating free cash flow (Non-GAAP) | $ | 251 | $ | 230 | $ | 21 | $ | 235 | $ | 343 | $ | (108 | ) | ||||||||||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20180425005487/en/
Press:
Vice President, Corporate Communications and
Corporate Affairs
jeremy.zweig@viacom.com
or
Senior Manager, Corporate Communications
alex.rindler@viacom.com
Investors:
Senior Vice President, Investor Relations
james.bombassei@viacom.com
or
Vice President, Investor Relations
kareem.chin@viacom.com
Source:
News Provided by Acquire Media