Viacom on Wednesday reported better-than-expected fiscal second-quarter earnings as its film unit returned to a quarterly profit.
Revenue also beat estimates in the company's latest financial report that Wall Street will dissect for signs of how the turnaround strategy, unveiled more than a year ago by CEO Bob Bakish and focused on six flagship brands, is playing out.
The company, which remains in talks about a possible merger with CBS Corp., reported adjusted net income attributable to the company of $641 million and adjusted diluted earnings per share of 92 cents, which exceeded the average Wall Street analyst forecast of 79 cents per share. Quarterly revenue also exceeded analysts' estimates.
Paramount Pictures, Viacom's film unit, which has benefited from a growing TV production business and had such releases in the latest quarter as Annihilation and Sherlock Gnomes, swung to a profit, posting operating income of $9 million. The most recent quarterly profit for the studio unit before the latest period had been for the quarter ended June 30 of 2017.
The Paramount "turnaround efforts have firmly taken hold," Bakish said.
Viacom's media networks unit, as expected, again posted a U.S. advertising revenue decline, but worldwide ad revenue was roughly unchanged from the year-ago period.
Ratings at the company have been impacted by a decline in overall pay TV subscribers, but MTV and BET continued to grow their ratings in the latest quarter.
Viacom executives are expected not to comment on the CBS deal talks during an earnings conference call later in the morning.
The Redstone family controls both Viacom and CBS. The companies' vice chair Shari Redstone has been speaking out about the benefits of scale. The firms, which separated in 2006, said on Feb. 1 they have formed independent board committees to explore a merger after in 2016 abandoning talks about such a deal.
CBS Corp. recently made a below-market opening bid for Viacom, which was immediately rejected. Beyond price, the management of a possibly combined company has been a key issue of debate in the talks. CBS Corp. wants its chairman and CEO Leslie Moonves and COO Joe Ianniello to run a merged company if a deal is reached, while Viacom and Redstone have been pushing for a role for Viacom boss Bakish.
