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Viacom Inc. (NASDAQ:VIAB, VIA) today reported financial results for the quarter and fiscal year ended September 30, 2016.
Fiscal Year 2016 Results | |||||||||||||||||||||||
| (in millions, except per share amounts) | Quarter Ended | B/(W) | Year Ended | B/(W) | |||||||||||||||||||
| 2016 | 2015 | 2016 vs. | 2016 | 2015 | 2016 vs. | ||||||||||||||||||
GAAP | |||||||||||||||||||||||
| Revenues | $ | 3,226 | $ | 3,788 | (15 | )% | $ | 12,488 | $ | 13,268 | (6 | )% | |||||||||||
| Operating income | 332 | 1,055 | (69 | ) | 2,526 | 3,112 | (19 | ) | |||||||||||||||
| Net earnings from continuing operations attributable to Viacom | 252 | 884 | (71 | ) | 1,436 | 1,922 | (25 | ) | |||||||||||||||
| Diluted EPS from continuing operations | 0.63 | 2.21 | (71 | ) | 3.61 | 4.73 | (24 | ) | |||||||||||||||
Non-GAAP* | |||||||||||||||||||||||
| Adjusted operating income | $ | 538 | $ | 1,055 | (49 | )% | $ | 2,732 | $ | 3,920 | (30 | )% | |||||||||||
| Adjusted net earnings from continuing operations attributable to Viacom | 273 | 614 | (56 | ) | 1,465 | 2,210 | (34 | ) | |||||||||||||||
| Adjusted diluted EPS from continuing operations | 0.69 | 1.54 | (55 | ) | 3.68 | 5.44 | (32 | ) | |||||||||||||||
* Non-GAAP measures referenced in this release are detailed in the Supplemental Disclosures at the end of this release.
Tom Dooley, interim President and CEO, said, “Viacom ended the 2016 fiscal year well into our transition, as the company’s industry-leading data program increased in size and sophistication, ratings stabilized at several of our key networks and Paramount has begun to rebuild a full, dynamic slate of films. In addition, our international media networks business is stronger than ever, and we will continue to broaden our footprint and apply our successful strategies to additional territories in attractive markets. With new leadership across the company, continued investments in new content, technologies and targeted acquisitions, and an expanded Board of Directors, I have great confidence in Viacom’s next phase, as the company explores the exciting possibilities ahead.”
Revenues | |||||||||||||||||||||||
| (in millions) | Quarter Ended September 30, | B/(W) | Year Ended September 30, | B/(W) | |||||||||||||||||||
| 2016 | 2015 | 2016 vs. | 2016 | 2015 | 2016 vs. | ||||||||||||||||||
| Media Networks | $ | 2,483 | $ | 2,787 | (11 | )% | $ | 9,942 | $ | 10,490 | (5 | )% | |||||||||||
| Filmed Entertainment | 774 | 1,025 | (24 | ) | 2,662 | 2,883 | (8 | ) | |||||||||||||||
| Eliminations | (31 | ) | (24 | ) | NM | (116 | ) | (105 | ) | NM | |||||||||||||
| Total Revenues | $ | 3,226 | $ | 3,788 | (15 | )% | $ | 12,488 | $ | 13,268 | (6 | )% | |||||||||||
| NM – Not Meaningful | |||||||||||||||||||||||
Quarterly revenues declined 15% to $3.23 billion. Media Networks revenues declined 11% to $2.48 billion, resulting from declines in affiliate and advertising revenues that were partially offset by higher ancillary revenues. Domestic and worldwide affiliate revenues decreased 19% and 16%, respectively, reflecting significantly higher revenues from SVOD arrangements in the prior year quarter. International affiliate revenues increased 7%. Excluding an unfavorable 8% impact of foreign exchange, international affiliate revenues increased 15%, driven by new channel launches, increased subscribers, rate increases and the completion of certain SVOD and other OTT arrangements. Domestic advertising revenues declined 8%, reflecting a decline in television ratings at select networks, partially offset by higher pricing. Worldwide advertising revenues also decreased 8%, reflecting the domestic decline and a 7% decrease in international advertising revenues. Excluding an unfavorable 13% impact of foreign exchange, international advertising revenues increased 6%, resulting from continued growth in Europe.
Filmed Entertainment revenues declined 24% to $774 million, driven by lower theatrical revenues due to the strong international performance of Mission: Impossible – Rogue Nation in the fourth quarter of 2015. Overall, theatrical revenues declined 55% to $203 million. Licensing revenues were $326 million and home entertainment revenues increased 23% to $199 million.
Full-year revenues were $12.49 billion, a decline of 6% from the prior fiscal year. Media Networks revenues decreased 5% to $9.94 billion, reflecting a 4% decline in worldwide advertising revenues, as well as a 7% decrease in affiliate revenues. Filmed Entertainment revenues decreased 8%, principally due to lower theatrical and home entertainment revenues partially offset by a 12% increase in licensing revenues. Excluding an unfavorable 1% and 2% impact of foreign exchange, Media Networks and Filmed Entertainment revenues declined 4% and 6%, respectively.
Operating Income/(Loss) | |||||||||||||||||||||||
| (in millions) | Quarter Ended September 30, | B/(W) | Year Ended September 30, | B/(W) | |||||||||||||||||||
| 2016 | 2015 | 2016 vs. | 2016 | 2015 | 2016 vs. | ||||||||||||||||||
| Media Networks | $ | 750 | $ | 1,022 | (27 | )% | $ | 3,484 | $ | 4,143 | (16 | )% | |||||||||||
| Filmed Entertainment | (137 | ) | 122 | NM | (445 | ) | 111 | NM | |||||||||||||||
| Corporate expenses | (50 | ) | (59 | ) | 15 | (213 | ) | (235 | ) | 9 | |||||||||||||
| Eliminations | (1 | ) | (1 | ) | NM | 1 | 2 | NM | |||||||||||||||
| Equity-based compensation | (24 | ) | (29 | ) | 17 | (95 | ) | (101 | ) | 6 | |||||||||||||
| Adjusted operating income (Non-GAAP) | 538 | 1,055 | (49 | ) | 2,732 | 3,920 | (30 | ) | |||||||||||||||
| Restructuring and programming charges | (206 | ) | — | NM | (206 | ) | (784 | ) | 74 | ||||||||||||||
| Loss on pension settlement | — | — | — | — | (24 | ) | NM | ||||||||||||||||
| Operating income (GAAP) | $ | 332 | $ | 1,055 | (69 | )% | $ | 2,526 | $ | 3,112 | (19 | )% | |||||||||||
| NM – Not Meaningful | |||||||||||||||||||||||
Quarterly operating income was $332 million, and adjusted operating income was $538 million. Reported operating income reflects restructuring costs related to executive severance incurred in the fiscal fourth quarter. Media Networks adjusted operating income decreased 27% to $750 million primarily due to the decline in revenues. The Filmed Entertainment adjusted quarterly operating loss was $137 million, compared to adjusted operating income of $122 million in the prior year, resulting from a decline in revenues and a previously-disclosed $115 million programming impairment charge.
Full-year operating income declined to $2.53 billion, and full-year adjusted operating income declined to $2.73 billion. Media Networks adjusted operating income decreased 16% to $3.48 billion, primarily due to the decline in revenues. Filmed Entertainment adjusted operating loss was $445 million.
Quarterly net earnings from continuing operations attributable to Viacom declined to $252 million, and adjusted quarterly net earnings from continuing operations declined to $273 million, driven by the decline in operating income. Diluted earnings per share from continuing operations for the quarter declined to $0.63, and quarterly adjusted diluted earnings per share were $0.69.
Full-year net earnings from continuing operations attributable to Viacom were $1.44 billion, and adjusted full-year net earnings declined to $1.47 billion. Diluted earnings per share from continuing operations for the year declined to $3.61, and full-year adjusted diluted earnings per share were $3.68.
Debt
At September 30, 2016, total debt outstanding was $11.91 billion, compared with $12.29 billion at September 30, 2015. In October 2016, the Company issued $400 million in aggregate principal amount of 2.250% senior notes due 2022 and $900 million in aggregate principal amount of 3.450% senior notes due 2026. A portion of the proceeds will be utilized in November 2016 for the redemption of all $400 million of the Company’s outstanding 2.500% senior notes due December 2016 and all $500 million of the Company’s outstanding 3.500% senior notes due April 2017. The Company’s cash balances were $379 million at September 30, 2016, a decrease from $506 million at September 30, 2015.
