Updated from 4:31 p.m. to reflect strong ratings data.
NEW YORK (TheStreet) -- Viacom (VIA) enjoyed a solid rally Thursday afternoon after better-than-expected earnings seemed to diminish the Netflix (NFLX) threat. The mass media conglomerate's shares closed 3.8% higher at $84.01, fueled by a 16% rise in net profit during its fiscal first quarter.
But declining revenue and weak advertising growth tell a different story. Is this another case of "cord-cutters," that wily online-streaming demographic, undercutting media conglomerates' top-line?
To be fair, ratings were very strong across the majority of its major networks. Nickelodeon, number one in ratings for children aged 2 to 11, marked its twelfth consecutive month of year-over-year ratings growth. Adult-targeted Comedy Central enjoyed its highest-rated quarter in nearly six years among the male demographic aged 18 to 34, led by returning titles Tosh.0, Key & Peele and South Park.
However, domestic advertising revenue grew 3% during the December-ended quarter, softer than the 5% growth rate expected by Wall Street. During a post-earnings conference call, Viacom CEO Philippe Dauman said sales in October and November were hampered by continued budget discussions in Washington and resulting uncertainty in the business community.
"Companies were feeling uncertain, trying to make their years and retrenching a bit. That dissipated once the budget deal occurred and we started seeing strength again in December and so we're continuing into this quarter where demand is back to normal," he explained.
Sequential improvement in domestic advertising sales growth is expected in the current March-ending quarter, even as Viacom faces headwinds caused by a later-than-usual Easter period shifting to the fiscal third quarter.