Viacom Revs Fell 14%, But Upfront Solid

money arrow downSomewhat surprisingly as the upfront churns, Viacom's fleet of cable networks have nearly wrapped their deal-making. Relatively speaking, CEO Philippe Dauman said the company is satisfied with the performance.

"We are just about done with our advertising upfront [and] given current conditions, we are very pleased with the results from both a volume and pricing standpoint," Dauman said on a conference call Tuesday to discuss second-quarter performance.

He declined to offer specifics on CPMs or inventory levels, although there is "pressure" on volume as advertisers want to maintain flexibility. Generally, Viacom networks sell between 45% and 65% of inventory.

Dauman added that "the feeling on the part of advertisers that perhaps they could extract dramatic reductions in prices because the economy was going to hell in a hand basket -- that feeling has dissipated."

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The upfront results came after Viacom saw domestic ad dollars decline in the April-June period by 6% -- marking the fourth straight quarter with a year-over-year drop.

One of the contributors to the decline was continued ratings weakness at the flagship MTV network. Dauman said revitalizing the channel is paramount.

"We will take whatever steps are necessary to turn MTV's ratings trend positive," he said. "This is the top priority of the MTV Networks management team -- and a key priority for Viacom."

Overall in the second quarter, ad dollars at MTV Networks and the BET group were down 8% globally to $1.1 billion. The company does not break out domestic figures. Full revenues also fell 8% to $2 billion. Even with cost-cutting measures, expenses rose 6% (to $1.2 billion). Operating income was down 12% to $671 million.

For Viacom at large, revenues fell 14% to $3.3 billion, with operating income down 26% to $586 million.

On advertising, Dauman added that the scatter market improved toward the end of the second quarter, citing a "stabilization in the marketplace." He said advertisers that exercised options to cancel buys returned those dollars to the networks later in the quarter -- although he did not say whether marketers received lower prices.

Dauman said Viacom received a lift in the second quarter from BET, which saw its highest ratings in history, propelled by an awards show that served as a tribute to Michael Jackson. The CEO has cited BET as an asset with considerable revenue upside since taking over the company. (One reason is opportunity for international expansion.) Viacom also said Tuesday that the Epix premium network launching in October has inked its first carriage deal with Verizon FiOS. The channel is a joint venture between with Lionsgate and MGM.

One investor concern with Viacom is whether some of its networks can maintain vitality as younger viewers increasingly migrate online. Dauman dismissed that, while saying the MTV Networks group has seen strong growth with its online properties. More than 1 billion short-form videos were streamed in the second quarter. Still, Dauman said "monetization in this arena ... is somewhat elusive."

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