In Depth

Viacom Reports Bigger Profits, Investigates 'Inexplicable' Ratings Drop at Nickelodeon -- Abrupt Decline Doesn't Square with Set-Top Box Data

Advertising Age

Viacom, owner of MTV and Paramount Pictures, topped analysts' profit and revenue estimates for the fourth quarter, but said it is working with Nielsen to investigate an abrupt and "inexplicable" drop in Nickelodeon's ratings in mid-September, Bloomberg News reports.

The sudden decline in Nickelodeon's Nielsen ratings undermined the company's ad revenue for the quarter, Viacom CEO Philippe Dauman said during a conference call today. The company's media networks division reported a 7% year-over-year increase in global ad revenue, shy of the company's targets.

Set-top box ratings show "meaningfully different" audience trends for Nickelodeon, Mr. Dauman said.

Viacom as a whole benefited from growth in its TV and film businesses. Total revenue increased 22% to $4.05 billion, compared with the average analyst estimate of $3.75 billion. Net income tripled to $576 million.

Total revenue from the networks division, which includes Comedy Central and BET in addition to MTV and Nickelodeon, increased 7.7% to $2.29 billion as advertising and affiliate fees from cable and satellite TV operators both rose. Filmed-entertainment revenue rose 46% in the quarter to $1.79 billion, driven by the release of "Transformers: Dark Side of the Moon" at the end of June. The film, from Viacom's Paramount, generated $1.12 billion in worldwide ticket sales, according to researcher Box Office Mojo.

"We expected a strong number for film, and it was a big beat," said Alan Gould, an analyst with Evercore Partners, who said Viacom had "a hell of a quarter at the box office."

Viacom benefits from having several different businesses, which helps it make up for a slowdown in any one of them, said Mr. Gould, who rates the shares "overweight" and doesn't own any.

The company increased its stock-buyback program based on strong cash flow this year. "Demonstrating our confidence in Viacom's long-term outlook, the board approved today a significant increase in our buyback program," Mr. Dauman said in a statement on its earnings.