Viacom profits take hit as conglomerate shuffles repeats for new hits

Fresh off taking a $784 million write-down earlier in April, partly to account for archival programming that has little value in the streaming video era, Viacom experienced a first-quarter loss of $53 million, compared to a $502 million profit in Q1 2014.

The conglomerate, which operates prominent cable channels including Comedy Central, MTV and Nickelodeon, beat analysts' forecast for revenue, generating $3.08 billion in the first quarter, a 3 percent slide. 

Operating income for the media networks fell 5 percent to $903 million, with revenue up 3 percent to $2.45 billion. Ad sales continue to fall, down 5 percent, but pay-TV licensing fees offset much of that loss, also increasing 5 percent. 

"The 5 percent decline in domestic advertising is a concern for investors," said Paul Sweeney, an analyst at Bloomberg Intelligence. "Viacom is battling ratings weakness across several of its networks. Until it fixes its ratings, advertising will be under pressure."

The earning data for one of pay-TV's biggest programming conglomerates is being closely watched, given Viacom's recent struggles to adapt to a pay-TV era suddenly and severely impacted by SVOD services like Netflix, as well as cope with a soft domestic ad market for linear TV.

No big programmer has suffered like Viacom has suffered.

The conglomerate has moved quickly to change course, writing off the projected back end of archival network hits like CSI and 30 Rock, which don't have the long tail they used to amid a programming environment in which viewers have a seemingly infinite selection of original shows to choose from. 

Viacom is now trying to build new hits, such as Comedy Central's Broad City, which has experienced a recent 10-fold increase in its digital audience. 

"We're becoming less reliant on old, not-so-relevant programming we acquired years ago," Viacom CEO Philippe Dauman said on a conference call Thursday, covered by Bloomberg and other media outlets. "We said goodbye to that, and we're saying hello to new, more engaging, more live."

Dauman also noted that Viacom's programming accounts for 26 percent of all on-demand viewing via pay-TV providers, he said.

For more:
- read this Deadline Hollywood story
- read this Variety story
- read this Bloomberg story

Earnings summary: Sizing up pay-TV earnings for the first quarter of 2015

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