(Reuters) - Viacom Inc’s (VIAB.O) quarterly profit beat analysts’ estimates and the media company forecast a strong current quarter, boosted by the success of its movie “Mission: Impossible - Fallout”.
The upbeat results and forecast lifted the company’s shares by 7 percent, with Chief Executive Officer Bob Bakish saying Paramount Pictures will turn in a profit again in the fourth quarter.
The studio’s latest Tom Cruise-starrer Mission Impossible movie is on track to become a money churner after grossing nearly $330 million worldwide since releasing in the last week of July.
“Given the success of ‘Mission: Impossible - Fallout’, we expect September quarter to be the third consecutive quarter of profitability for Paramount,” Chief Financial Officer Wade Davis said on a post-earnings call.
Since taking the helm in 2016, Bakish has focused on Paramount and the company’s cable TV business, which like its peers has been losing subscribers in the face of competition from Netflix Inc (NFLX.O) and Amazon.com Inc’s (AMZN.O) Prime video.
The owner of MTV, Comedy Central and Nickelodeon said domestic advertising revenue fell 3 percent to $922 million, while domestic affiliate revenue also fell 3 percent to $978 million.
But, the company expects domestic affiliate revenue to increase in the current quarter and domestic ad sales to start growing again in 2019.
“We’d call this a mixed set of results. Most positives are cost initiatives at Media that are improving margins and Paramount’s revitalization,” said RBC analyst Steven Cahall. “Most negative is the advertising result since it’s still Viacom’s largest revenue pool.”
The results come when Viacom investors are weighing the prospects of a merger with CBS Corp (CBS.N).
Major shareholder Sumner Redstone and his daughter Shari want to merge Viacom with CBS - a company they control - but the efforts are being opposed by CBS Chief Executive Officer Leslie Moonves.
In the midst of the raging legal battle, CBS is investigations allegations of sexual misconduct against Moonves.
“Investor sentiment and enthusiasm are being driven by better fundamentals in F2019 and renewed expectation of a merger with CBS,” said JBL analyst Jeffrey Logsdon.
Bakish said on the call he would not comment on any specific M&A related queries.
Net income attributable to Viacom fell to $522 million, or $1.29 per share, in the third quarter ended June 30, from $683 million, or $1.70 per share, a year earlier.
Total revenue fell 3.7 percent to $3.24 billion. On an adjusted basis, the company earned $1.18 per share.
Analysts on average had expected a profit of $1.07 per share and revenue of $3.26 billion, according to Thomson Reuters I/B/E/S.
Additional reporting by Vibhuti Sharma in Bengaluru; Editing by Sriraj Kalluvila and Saumyadeb Chakrabarty