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Viacom Q2 2010 Earnings Call Transcript

Viacom Q2 2010 Earnings Call Transcript

Viacom (VIA.B)

Q2 2010 Earnings Call

August 05, 2010 8:30 am ET


Sumner Redstone - Founder and Executive Chairman

Philippe Dauman - Chief Executive Officer, President and Director

James Bombassei - Senior Vice President of Investor Relations

Thomas Dooley - Chief Operating Officer, Chief Financial Officer and Director


Spencer Wang - Crédit Suisse AG

Imran Khan - JP Morgan Chase & Co

Richard Greenfield - BTIG, LLC

Anthony DiClemente - Barclays Capital

Alan Gould - Natexis Bleichroeder, Inc.

David Bank - RBC Capital Markets Corporation

Ben Swinburne - Morgan Stanley

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Good day, everyone, and welcome to the Viacom earnings release teleconference for the third quarter ended June 30, 2010. [Operator Instructions] At this time, I'd like to turn the call over to Senior Vice President, Investor Relations, Mr. Jim Bombassei. Please go ahead, sir.

James Bombassei

Good morning, everyone, and thank you for taking the time to join us for our earnings call for the quarter ended June 30. Joining me for today's discussion are Sumner Redstone, our Chairman; Philippe Dauman, our President and CEO; Tom Dooley, our Chief Operating Officer and CFO; and Jimmy Barge, our Controller and Head of Tax and Treasury.

Please note that in addition to our press release, we have slides and trending schedules containing supplemental information available on our website.

Let me refer you to Page #2 in the web presentation and remind you that certain statements made on this call are forward-looking statements that involve risks and uncertainties. These risks and uncertainties are discussed in more detail in our filings with the SEC. Reconciliations for non-GAAP financial information discussed on this call can be found in our earnings release or on our website.

And now I'll turn the call over to Sumner.

Sumner Redstone

Thank you, Jim, and good morning, everyone. As all of you can well imagine, we are more than pleased to be with you today to share our perspective on the strong results we have seen in the quarter ending June 2010. With six months under our belt in this calendar year, day after day, our confidence continues to grow as the emerging economy recovery builds. Now of course we're not all the way back, but the horizon's brighter than it has been for some time. Consumers are returning to the marketplace, marketers are beginning to spend again to grow revenues and capture share. And Viacom, Viacom with a leading entertainment brand, strong audience connections, is now and will continue to benefit from the upswing in confidence and the upswing in spending.

I have a very capable, an insight for leadership of CEO, Philippe Dauman and COO (sic)[CFO], Tom Dooley. Viacom has made investing in programming it's top priority, and that has kept our creative engine very strong despite the difficult environment. As a result, our film and television pipeline is deep with potential new hits and popular returning television series and film franchises, and this have turned exciting ways to driving box-office growth. And thanks to our continued laser focus of enhancing the efficiency of our business, our creative success continues to translate directly to our bottom-line performance. Viacom is generating strong cash flow and returning the value to shareholders as we have demonstrated by our recently initiated dividend program.

And today's announcement underscores Viacom's clear advantages. What we have is this: we have a smart strategy, we have an extremely capable and disciplined management team, and we have great world-class brand [indiscernible](22:51). The success that we touched on in these results is the [indiscernible](22:56) to the bright future we see not just for this year, not just for next year, but for indeed many years to come.

And now, I would like to turn this call over to my very, very close friend, Philippe Dauman. [indiscernible](23:19), Philippe.

Philippe Dauman

Thank you, Sumner, and good morning, everyone. Thank you for joining us today. We have just closed out another great quarter. Our performance over the first half of the year reflects continued progress against our operational objectives. This, in turn, is driving strong bottom line results. Both our Media Networks and Filmed Entertainment businesses are delivering strong results creatively, operationally and financially.

As the media industry continues to evolve and adapt to a digital environment, our singular focus on creating the compelling content our audience's desire across every screen has positioned Viacom very well. While the economic recovery appears to be progressing in fits and starts, a condition that leaves us cautious, we are encouraged by the growing momentum we see in the domestic advertising market. As I will discuss in a few moments, we completed a much stronger upfront than we experienced a year ago. This establishes a stronger base for our next fiscal year.

This morning, I will briefly review our financial performance and then turn to our operational results in both Media Networks and Filmed Entertainment. Tom will provide additional detail on our progress, and then we'll be happy to take your questions. As we review our results this morning, Tom and I will refer to the adjusted numbers.

Viacom's consolidated revenues were $3.3 billion in the June quarter, flat with the prior year's results. Media Networks generated a 6% increase in revenues on higher advertising sales and affiliate fees. This growth offsets a decline in our Filmed Entertainment segment, where home entertainment revenues were down substantially year-over-year, primarily due to the number and mix of titles.

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