Cost-cutting hurts, but it works. Viacom (VIA) became the latest media conglomerate to demonstrate that truth when it reported fourth-quarter and year-end earnings Thursday.Despite a continuing swoon in advertising revenues and disappointing sales for its Rock Band video-game franchise, Viacom managed to post a profit of $694 million in the fourth quarter, more than quadruple what it earned the year before. Much of the difference had to do with restructuring expenses charged in 2008, but even leaving that aside, the company showed robust earnings growth while handily beating analysts' projections with its $1.14 a share.
Ad revenues across Viacom's TV properties -- which include MTV, VH1, Comedy Central and Nickelodeon -- were down 3% to 1.3 billion in the fourth quarter. That marks a mild improvement, as full-year ad revenues were down 7% year-over-year. Affiliate fees for Viacom's cable networks and the performance of several blockbuster movies, including Transformers 2 and Star Trek, helped offset the ad losses.
In its earnings release, the company singled out lower 2009 sales of Rock Band as a major contributor to a 31% falloff in ancillary revenues. This even though a special Beatles edition of the game released last fall sold better than expected and was a widely-anticipated cultural event.
Viacom Reports Strong Profits Despite Soft Ad and Game Sales