Viacom's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Viacom (VIA.B)

Q1 2012 Earnings Call

February 02, 2012 8:30 am ET


James Bombassei - Senior Vice President of Investor Relations

Sumner M. Redstone - Founder and Executive Chairman

Philippe P. Dauman - Chief Executive Officer, President and Member of The Board of Directors

James W. Barge - Chief Financial Officer and Executive Vice President of Tax & Treasury

Thomas E. Dooley - Chief Operating Officer, Senior Executive Vice President and Director


Michael Nathanson - Nomura Securities Co. Ltd., Research Division

Alexia S. Quadrani - JP Morgan Chase & Co, Research Division

Douglas D. Mitchelson - Deutsche Bank AG, Research Division

Alan S. Gould - Evercore Partners Inc., Research Division

Anthony J. DiClemente - Barclays Capital, Research Division

Jessica Reif Cohen - BofA Merrill Lynch, Research Division

Richard Greenfield - BTIG, LLC, Research Division



Good day, ladies and gentlemen. Welcome to the Viacom Fiscal First Quarter 2012 Earnings Release Teleconference. Today's call is being recorded. And at this time, I would like to turn the call over to Senior Vice President of 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 December 31. Joining me for today's discussion are Sumner Redstone, our Chairman; Philippe Dauman, our President and CEO; Tom Dooley, our Chief Operating Officer; and Jimmy Barge, our Chief Financial Officer.

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

Thank you, Jim. Good morning to all. I am pleased to once again also join Philippe, Tom, Jimmy to discuss Viacom's quarterly results. Despite a choppy overall economy, it was in fact another successful period on both the top and bottom line for Viacom and we continue to use our creative resources, our financial discipline to deliver for shareholders. Our Media Networks are highly in demand all over the world. The creative minds behind our brands are constantly evolving our private property to ensure genuine connections in our industry [ph], new opportunities for our business partners. Paramount Pictures continued to have an unparalleled ability to market and distribute a great slate of motion pictures and ended the calender year, ranked #1 of all the United States box office, the #1 studio. We are indeed in a strong position [indiscernible]. None, of course, is impossible with our outstanding diligence. Our experienced management team skillfully execute our plans to provide value for creative content to audiences across the globe for the long-term benefit of our shareholders. Now I'd like to turn this call over to the leader of that team, a man who I appropriately call the wisest man I have ever met, my friend and colleague, Philippe Dauman.

Philippe P. Dauman

Thank you very much, Sumner. And good morning, everyone. I'm glad you could join us today. Despite headwinds in ad sales, Viacom ended the first quarter of our fiscal year with significant strength. Across the company, we have real momentum. Creative and operational excellence are showing through in every corner of our business and at this early stage, we are seeing ad sales improvement in the second quarter. We're continuing to invest in more and more original programming to strengthen our brand and their deep audience connections. It was true in 2011 and it will be true again in 2012. In fact, in our 2012 fiscal year, Viacom will invest about $3 billion in our Media Networks program. As a result, our Media Networks attract the most desirable audiences, making Viacom a first-choice partner for marketers and distributors alike. These investment and those relationships will drive our success quarter-after-quarter and year-after-year.

We continue to see strong affiliate growth as both existing and emerging distributors turn to our brand to fuel their products and services. We expect our affiliate revenue to grow on an annualized basis in the high-single to low-double digit for the foreseeable future. As we unlock value for our content across the platform, we're unlocking growth potential across global markets as well, expanding our footprint and margins internationally with our Media Networks and Paramount's rich film library. Creative success and operational discipline are hand in glove at Paramount Pictures and the studio remains focused on its strategy of releasing a streamlined slate of franchise tentpoles and reasonably priced films with box office potential, supported by one of the industry's finest distribution and marketing organization. And that strategy is clearly working as evidenced by Paramount's outstanding performance as the #1 studio at the worldwide box office in 2011.

Finally, by operating efficiently, managing costs and seizing every opportunity to monetize our content, we continue to generate significant free cash flow and to make good on our commitment to return substantial capital to our shareholder both in the form of stock buybacks and dividends.

This morning, I will briefly review our financial results for the first quarter and share highlights from our divisions. Tom and Jimmy will provide more detail, and then we'll gladly take your questions. Let's begin with the numbers.

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