Ad Rebound a ‘Shore’ Thing for Viacom

Viacom on Thursday was the latest media conglomerate to trumpet an improving advertising marketplace, reporting a tidy increase in second quarter sponsor commitments at its cable networks division.
For the three month period ended June 30, the Viacom cable nets––the clutch of high-gloss brands that includes MTV, VH1, Comedy Central, Nickelodeon and BET––boosted overall revenue 6 percent versus Q2 2009, with a total haul of $2.09 billion. Stateside revenue accounted for 87 percent of the segment’s dollar intake, growing 6 percent to $1.81 billion.
Domestic ad sales revenues were up 4 percent, and while that lagged behind the double-digit gains posted by Turner Broadcasting System, Discovery Communications, Fox Cable Networks, Comcast Networks and Rainbow Media, on a volume basis, only Turner racks up the $1 billion quarterly sales figures commanded by Viacom.
 Global ad sales were up 4 percent as well, totaling $1.12 billion. Affiliate fees grew 11 percent to $790 million, while domestic sub fees were up 12 percent from the prior-year period. Adjusted operating income at the cable division rose 14 percent to $789 million.
In a note to investors, BTIG Research analyst Richard Greenfield noted that while the outlook for the general ad market remains unclear, “MTV’s ad revenues should continue to accelerate over the course of 2010.” Greenfield said that the MTV Networks should get a boost from its 2010-11 upfront sales, which were “dramatically better than its 2009-10 upfront, due to ratings improvements.”
Viacom president and CEO Philippe Dauman told investors that the MTV Networks were able to lock in mid to high single-digit CPM increases in this year’s upfront, adding that the unit moved slightly more than half of its available inventory. Per RBC Capital Markets estimates, Viacom averaged a 5.5 percent pricing premium during the annual bazaar, while lifting dollar volume 15 percent.
While predictably bullish on his company’s performance, Viacom chairman Sumner Redstone did sound a slight note of caution in his prefatory remarks, saying of the economy, “Of course, we are not all the way back, but the horizon is brighter than it has been for a long time.”

In a Q&A session following Viacom’s earnings, Dauman addressed MTV’s GTL Situation. “There were some issues when Jersey Shore first launched, but advertisers are now scrambling to get the show,” Dauman said, acknowledging the minor uproar the reality series churned up when it debuted last year. On July 29, Snooki, JWoww and the rest of the colorful (read: orange) cast returned for a second go-around, drawing 5.25 million viewers, while topping the week among viewers 18-49 (3.43 million) and 18-34 (2.73 million).

While the show makes for some great zeitgeist TV, as Greenfield remarked, “the rebound at MTV and Viacom’s cable networks more broadly is so much more than just Jersey Shore.” The analyst added that “Investors can no longer say MTV is ‘dead,’ and that the generation that used to watch MTV is now all about video games, texting and social networking. If you put content on TV that speaks to the current generation of teens/young-adults, people watch … it’s still that simple.”

All told, Viacom amassed $3.3 billion in second quarter revenue, flat (+0.1 percent) when compared to the year-ago period. Net income rose 51 percent to $418 million, or 68 cents a share, from $277 million, or 46 cents a share.
Shares of Viacom dipped 54 cents, or 1.41 percent, to $37.86 in early afternoon trading.