NEW YORK Viacom today said that its fourth-quarter profit fell 69 percent on $454 million in restructuring charges, as a compromised advertising market and expenses related to layoffs took a bite out of the media conglomerate’s bottom line.
Net income dropped to $173 million, or 28 cents a share, from $595.5 million, or 86 cents a share, in the year-ago period. Excluding some items, profit was 76 cents a share, down from 84 cents -- a penny shy of consensus estimates.
At the media networks division -- which houses Viacom’s stable of cable channels like MTV, Comedy Central and Nickelodeon -- operating income fell 44 percent to $509 million, down from $916 million in the fourth quarter of 2007. The drop included $389 million in charges related to programming write-offs and other restructuring.
The media networks group posted revenues of $2.48 billion, up 1 percent vs. $2.45 billion a year ago, on a 12 percent increase in worldwide affiliate revenue ($667 million). While the recession has made short work of the ad market, the media nets posted only a slight drop, taking in $1.35 billion in sales, a year-over-year decline of 3 percent.
“Our fourth-quarter results reflect the realities of a challenging economy,” said Viacom president and CEO Philippe Dauman. “The broad marketplace conditions weighed on our advertising, home entertainment and consumer products businesses.”
Dauman added that the December restructuring, which eliminated 850 jobs (or 7 percent of its workforce), helped Viacom prevent a free-fall. “We acted early and decisively to prepare for the rapid decline in economic conditions,” he said. “Without sacrificing the creation of great content, we aggressively managed our cost structure, which significantly boosted cash flow and further strengthened our balance sheet. ... While it is difficult to know how long these conditions will persist, our actions have positioned us very well to seize the opportunities that will arise as the economy recovers.”
While Dauman talked up ratings improvement in 2009, asserting that “trends at several of [the] core networks are improving as new programming gains traction,” the performance at the franchise nets took a toll on ad sales. MTV continued to struggle in the fourth quarter, as prime-time viewership fell 30 percent vs. a year ago, while VH1 was also down, averaging 752,000 viewers each night, a drop of 14 percent.
January showed some improvement, as MTV declined 12 percent vs. the first month of 2008. In the same period, VH1 was off 9 percent.
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