Viacom Reports 7% Worldwide Ad Decline

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Viacom's U.S. and worldwide advertising had a bit of a setback in its fiscal fourth-quarter 2012 period.

Domestic advertising revenues declined 6% and worldwide advertising revenues decreased 7%. For the full year, domestic advertising dropped 4%.

Chief reason: Viacom's kids' network Nickelodeon has seen some steep declines in ratings for the better part of 2012 -- around 30% -- after Nielsen's TV metrics in fall 2011 showed a sudden decline in viewers.

But Anthony DiClemente, media analyst of Barclays Capital, says that for the most part, these results were expected. He writes, Nick has made some gains with a new version of "Teenage Mutant Ninja Turtles."

"As the data continues to improve, Nick ratings are down just 13% in the [fiscal first quarter] to date. We expect another quarter of sequential improvement in the advertising growth rate, barring any commentary from management on the ad environment during the call."

In that call with analysts, Philippe Dauman, president and CEO of Viacom, says scatter market pricing is higher -- in the mid-teen percentages versus the mid-single-digit gains during the period a year ago.

While ad demand is still strong, the problem is having enough inventory to sell. Still, he doesn't expect advertising to be in the "positive" territory for the current calendar fourth-quarter period. "We are still climbing back up," says Dauman.

Overall, Viacom kept revenue for its media networks flat quarter to quarter at $2.29 billion because of higher domestic affiliate TV revenues -- some 12% lower than the previous period and from an 11% gain in worldwide affiliate revenues.

Company-wide Viacom's other entertainment business hurt the media company's overall quarterly revenues -- which sank 17% to $3.3 billion. Much of this came from lower results from theatrical and home entertainment titles for its Filmed Entertainment division -- sinking 39% to $1.09 billion.

The company said it had difficult comparisons to year-ago higher business from "Transformers: Dark of the Moon." It did note that sales of TV shows and other ancillary revenues of its Filmed Entertainment division rose 19% and 21%, respectively.

Operating income was down 3% to $933 million for its media networks, but up $195 million for its film entertainment unit. Overall net earnings at the company climbed 13% to $656 million for the third quarter.

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