NEW YORK (AP) — Viacom Inc., owner of the Paramount movie studio and several cable TV channels, said Thursday that net income grew 13 percent in the latest quarter even as revenue fell more than Wall Street expected with the lack of a strong theatrical release and a drop in television ad revenue.
Net income for the July-September quarter was $650 million, or $1.26 a share, compared with $576 million, or $1 a share, a year earlier. After adjusting for one-time items, earnings came to $1.21 per share.
Analysts surveyed by Fact Set were expecting adjusted earnings of $1.17 per share.
Revenue in the fiscal fourth quarter fell 17 percent to $3.36 billion from $4.05 billion and below the $3.41 billion analysts expected. Viacom reduced expenses by 26 percent to $2.31 billion, from $3.12 billion.
Revenue at Viacom's cable TV network business, which includes Nickelodeon, MTV, Comedy Central and BET, was largely unchanged at $2.29 billion, while operating income fell 3 percent to $933 million.
The advertising environment has slowed for most major media conglomerates, compounded in the quarter by the London Olympics, which saw advertising and audiences shift to NBC and its sister cable networks. Viacom faces additional challenges of ongoing audience weakness at its major TV networks.
Viacom said increases in fees from cable and satellite companies to carry its channels were countered by declines in advertising revenue. Ad revenue fell 6 percent in the U.S. and 7 percent worldwide. Viacom said a 10-day blackout of its channels on DirecTV because of a fee dispute canceled the benefits of the BET Awards moving to the July-September quarter. It fell in the previous quarter in 2011.
In a conference call with analysts, CEO Philippe Dauman said ratings at Nickelodeon were stabilizing, as the children's network ran new episodes of "SpongeBob SquarePants" and launched a revamp of "Teenage Mutant Ninja Turtles." He said new episodes of original programs are helping other networks as well.
Dauman reiterated complaints that current measurement techniques do not fully capture Viacom's audiences, particularly online, but said Viacom won't make programming decisions based on old-world measures.
"We're investing consistently in content to ensure that those brands remain vibrant, strong and well positioned to attract greater viewership as audiences evolve and measurement improves," he said.
Viacom said ad revenue was showing signs of improvement in the current quarter, though it likely won't be enough to show growth compared with last year.
The Paramount Pictures movie studio division saw revenue fall 39 percent to $1.09 billion in the fiscal fourth quarter because it had no blockbuster release. Its lone release in the quarter, the documentary "Katy Perry: Part of Me," sold $32 million in tickets worldwide. A year ago, it released "Transformers: Dark of the Moon," which has sold $1.1 billion in tickets.
Despite the large revenue drop, operating income for the business grew 5 percent to $195 million.
Viacom said it had eight movies on its release schedule for the holiday quarter, including "Rise of the Guardians," a cartoon produced by DreamWorks Animation SKG Inc., and "Flight," a Denzel Washington drama released Nov. 2 in North America. Viacom has been the distributor of DreamWorks Animation movies, though News Corp.'s 20th Century Fox is replacing Viacom next year.
Chief Operating Officer Thomas E. Dooley said that despite the heavy release schedule, Viacom expects the division to lose more in the holiday quarter than the $31 million it lost a year ago, when the company was still benefiting from the "Transformers" release. Dooley said the studio should see "healthy growth and profits" next year as the upcoming theatrical releases appear on home video.
For the full fiscal year, earnings fell 7 percent to $1.98 billion, or $3.69 per share, compared with $2.14 billion, or $3.59 per share, a year ago. Revenue fell 7 percent to $13.9 billion.
Viacom's main stock, Class B, increased $1.24, or 2.6 percent, to close at $49.23 Thursday.