Viacom posts a higher profit despite weak advertising

NEW YORK, Thu Nov 15, 2012 – Viacom Inc. reported a rise in quarterly profit, defying weak box-office sales and a challenging advertising environment.

The company said on Thursday that fiscal fourth-quarter net income rose 12 percent to $643 million even though revenue fell 17 percent.

“At the end of the day, I think they are really focused on operating efficiency,” said Brian Wieser, an analyst with Pivotal Research Group. “It’s a company that can still grow its margin even in a weak advertising market.”

Viacom has been challenged by a drop in ratings at its once- popular cable networks MTV and Nickelodeon. Domestic advertising revenue declined 6 percent in the latest quarter, but affiliate fees – reaped from contracts with cable operators that pay to air Viacom’s channels – were up 12 percent.

Also during the quarter, Viacom and satellite pay-TV provider DirecTV Group had a showdown resulting in a bruising nine-day blackout this summer of Viacom’s channels on DirecTV. The dispute was over a contract regarding affiliate fees. Viacom said it had negotiated higher fees in the new deal.