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Viacom Beats on Q4 Earnings, Rev

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Viacom Inc. (VIAB - Free Report) declared fourth-quarter 2013 financial results with both the bottom and the top line beating the Zacks Consensus Estimate.

Net income from continuing operations in the reported quarter was $739 million or $1.55 per share compared with $626 million or $1.21 per share in the prior-year quarter. The reported figure was above the Zacks Consensus Estimate of $1.44.

Total revenue in the reported quarter was $3,652 million, up 9% year over year and also above the Zacks Consensus Estimate of $3,627 million. Better performances from both the Media Networks and Filmed Entertainment segments have led to the improvement. Quarterly operating income was $1,107 million, up 5% year over year.

During the reported quarter, Viacom bought 33.7 million common shares for $2.7 billion. At the end of the fourth quarter of fiscal 2013, Viacom had $2,403 million in cash & cash equivalent and $11,867 million in outstanding debt on its balance sheet compared with cash and cash equivalent of $848 million and outstanding debt of $8,131 at the end of fiscal 2012. Debt-to-capitalization ratio was 0.70 against 0.52 at the end of fiscal 2012.

Media Networks Segment

Quarterly revenues of $2,460 million inched up 7% year over year, mainly triggered by better advertising, affiliate and ancillary revenues. Quarterly operating profit was $1,035 million, up 11% from the prior-year quarter. Both domestic and worldwide affiliate revenues rose 6% year over year. Both domestic and worldwide advertising revenues surged 10% year over year.  

Filmed Entertainment Segment

Quarterly revenues rose 11% year over year to $1,208 million, mainly driven by popular movie releases. Quarterly operating profit was $291 million, up 49% year over year.

Global Theatrical revenues increased 31% year over year, primarily due to more hit movie releases than the year-ago quarter. Worldwide Home Entertainment rose 24% coupled with a 5% decline in television license fees. However, Worldwide Filmed Entertainment ancillary revenues rose 54%.

Our Take

We believe that Viacom is well positioned for long-term growth as it continues to benefit from its predominantly cable networks-based business model, strong affiliate fee revenue growth, increased number of share repurchase plans, multi-platform content, and is one of the fastest growing traditional ad media.

However, stiff competition from other media companies like News Corp. (NWSA - Free Report) , CBS Corporation (CBS - Free Report) and Time Warner Inc. (TWX - Free Report) along with mounting debt may act as headwinds for the stock, going forward.

Currently, Viacom has a Zacks Rank #3 (Hold).

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