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Viacom Beats on Q2 Earnings, Lags Revs

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Viacom Inc. (VIAB - Free Report) declared second quarter of fiscal 2014 financial results with the bottom line beating the Zacks Consensus Estimate but the top line missing the same.

Net income from continuing operations in the reported quarter was $502 million or $1.13 per share compared with $478 million or 96 cents per share in the prior-year quarter. Quarterly adjusted earnings per share of $1.08 steered past the Zacks Consensus Estimate of $1.04.

Total revenue in the reported quarter stood at $3,174 million, up 1.2% year over year. However, the number fell short of the Zacks Consensus Estimate of $3,252 million. Quarterly operating income was $872 million, up 3% year over year. During the reported quarter, Viacom bought 10 million common shares for $850 million.

At the end of the second quarter of fiscal 2014, Viacom had $2,580 million in cash & cash equivalent and $13,379 million in outstanding debt on its balance sheet compared with cash and cash equivalent of $2,403 million and outstanding debt of $11,867 at the end of fiscal 2013. At the end of the reported quarter, the debt-to-capitalization ratio stood at 0.74 against 0.69 at the end of fiscal 2013.

Media Networks Segment

Quarterly revenues of $2,375 million inched up 6% year over year, mainly triggered by better advertising and affiliate fee revenues. Quarterly operating profit came in at $949 million, up 9% from the prior-year quarter. Domestic affiliate fee revenues grew 11% year over year while worldwide affiliate fee revenue rose 10% year over year. On a year-over-year basis, domestic and worldwide advertising revenues surged 2% and 3%, respectively. 

Filmed Entertainment Segment

Quarterly revenues fell sharply by 12% year over year to $831 million, mainly affected by lower carryover revenues from prior period film releases. Quarterly operating income was $11 million, down by a substantial 83% year over year. Global Theatrical revenues decreased 17% year over year. Worldwide Home Entertainment revenues declined 30% year over year.

Strategic Decision

Viacom today announced that the company has entered into a definitive agreement with Northern and Shell Media Group to acquire British public service broadcaster Channel 5 Broadcasting Ltd. for GBP 450 million (approximately $760 million).

Other Stocks to Consider

Currently, Viacom has a Zacks Rank #3 (Hold). Other better-ranked stocks in the media and entertainment industry include The Walt Disney Co. (DIS - Free Report) , News Corp. (NWSA - Free Report) and Lions Gate Entertainment Corp. . Whle Lions Gate sports a Zacks Rank #1 (Strong Buy), both Walt Disney and News Corp. carry a Zacks Rank #2 (Buy).

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