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Viacom Hits Lull Missing Expectations But Everyone Still Loves MTV

Stocks in this article: VIAB

NEW YORK (TheStreet) - Viacom (VIAB), the parent company of children's channel Nickelodeon, MTV and BET, encountered a lull this quarter. The company experienced declines in both total revenues and its filmed entertainment sector from the previous year.

Viacom generated $3.4 billion in revenue, a 7% decline from last year's $3.7 billion. Although encountering a slight increase in the media networks sector, increasing 1% to $2.59 billion from last year's $2.56 billion, Viacom's filmed entertainment sector shrank 26% to $856 million from $1.2 billion.

Shares fell 1.8% to close Wednesday at $80.31.

TheStreet's Whalen MacHale has details on Viacom's Q2 profit report:


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Although Paramount's Transformers: Age of Extinction has grossed over $1 billion dollar worldwide, Viacom attributed this decline was driven primarily by a "43% decrease in theatrical revenues due to the number of films and timing of releases" in a press note issued this morning. It is likely that the company will benefit from the success of Transformers and the Teenage Mutant Ninja Turtles film debuting on Friday in their 4th quarter.

Read More: Viacom's MTV Needs Millennials Though Eventually They'll Grow Up

Looking past Viacom's setbacks, the company continued to see growth in domestic affiliate fees, a portion of one's subscription fee for satellite or cable television operators that is ultimately reverted back to the content owner, a move Sanford Bernstein Media Analyst Todd Juenger suggests could be keeping Viacom intact.

"It's equally hard to argue Viacom's model will break, as long as core affiliate fees continue to grow at high-singles/low-doubles [digits]."

Aside from Viacom's steady affiliate fee growth, the company has yet to see a worthy return in their advertising sector. Viacom generated $1.24 billion dollars in advertisements this quarter, up 2% from last year; however, based on the company's venture into the digital market, Juenger suggests it just isn't enough.

"Beyond traditional TV advertising revenue, at some point one would expect to see meaningful, positive contribution from Viacom's digital advertising revenues (if not, then why make all of this content available on digital platforms?)," writes Juenger.

Viacom has embraced the digital age after reformatting Nickelodeon's Nick.com, providing children, ages 2-11, with access to content and games that can only be accessed online. Viacom's MTV has also teamed up with Spotify in order to bring viewers playlists curated by MTV staff to accompany the network's content.

Viacom CEO Philippe Dauman attributes weaker advertising growth to "soft demand" and weaker performances from some of the company's channels.

Despite an erratic quarter, Viacom's Executive Chairman Sumner Redstone, believes the company is "very well positioned".

Viacom shares dipped in morning trading hours and are now down 1.50% at 80.89.

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