(Corrects first paragraph to say ad growth slowed, not declined.)
Aug. 6 (Bloomberg) -- Viacom Inc., the owner of Comedy Central and Paramount Pictures, posted third-quarter profit that trailed analysts’ estimates as ad-sales growth and box-office revenue dropped more than projected.
Profit of $1.42 a share, excluding some items, missed the $1.43 average of 30 analysts’ estimates compiled by Bloomberg. Revenue dropped 7.4 percent to $3.42 billion in the period ended June 30, Viacom said today in a statement. Analysts anticipated $3.55 billion, on average.
The company, controlled by Chairman Sumner Redstone, faced tough comparisons in its cable-TV networks from a year ago, when domestic advertising sales were accelerating and fees from pay-TV systems rose more than 25 percent in the U.S. and internationally. Ad revenue at the U.S. media networks rose 1 percent, less than the company had suggested, said Barton Crockett, an analyst at FBR Capital Markets.
“The ad market deteriorated and we moved part way there,” Crockett said in an interview. “We didn’t quite move far enough.”
U.S. ad revenue at the media networks had gained 6 percent in the year-earlier period. Analysts had projected domestic ad sales growth of 3 percent, based on the average of four estimates compiled by Bloomberg.
Demand from advertisers in the consumer and automotive sectors has been particularly soft, Chief Executive Officer Philippe Dauman said on a conference call with analysts.
The company is seeing a delayed benefit from “Transformers: Age of Extinction,” the biggest film of the summer season so far. The company incurred most of the marketing costs during the period, while this quarter’s results will include a big chunk of the ticket revenue.
The movie opened in some countries in late June, and in others after the current quarter had begun. It has generated more than $1 billion in global ticket sales, according to Box Office Mojo.
Filmed entertainment revenue fell 26 percent to $856 million from a year earlier, which included “Star Trek Into Darkness.”
Viacom fell 1.8 percent to $80.31 at the close in New York. The shares have retreated 8 percent this year, compared with a 3.9 percent gain for the Standard & Poor’s 500 Index.
Net income dropped 5.1 percent to $610 million in the period, according to the company.
“If advertising is up low single digits it is really OK for the stock at this valuation, it is not a growth stock,” Crockett said.
New York-based Viacom reported results a day after Rupert Murdoch’s 21st Century Fox Inc. dropped its unsolicited bid for competitor Time Warner Inc.
On the conference call, Dauman said Viacom’s acquisition of Channel 5 in the U.K. would close at the end of this period. When asked about consolidation in the sector, Dauman said the company already has strategic scale.
“We don’t have to buy it to be there,” Dauman said.
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