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Channel 5 pushes Viacom to record results

Philippe DaumanViacom reported record results for the year ending September 30, driven by gains in its channels – or media networks – business, with the acquisition of UK broadcaster Channel 5 singled out as a key move.

Announcing its fiscal fourth quarter and full year results, the US-based media giant said that for the full year, higher media networks revenues were offset by lower film revenues. Full-year adjusted operating income grew 5% to a record US$4.13 billion and adjusted net earnings from continuing operations rose 3% to US$2.38 billion.

In Q4, Viacom said that media networks revenues grew by 8% to US$2.66 billion, mainly due to growth in affiliate fees.

Domestic and worldwide affiliate revenues increased 21% and 22% respectively, However, worldwide advertising revenues decreased 2%, reflecting a 5% US ad slump that was partially offset by a 33% increase in international advertising revenues.

“International advertising revenues benefited from the acquisition of Channel 5 on September 10, 2014,” said Viacom, which beat off competition during an auction process to buy the channel for £450 million (US$704 million) from Northern & Shell.

Commenting on the UK channel acquisition, Viacom president and CEO Philippe Dauman added: “Our September acquisition of Channel 5 has already made a positive impact on our business, and points the way to further significant long-term growth of our international business.”

Indeed, the decision to broadcast the MTV European Music Awards on both MTV and Channel 5 saw the show record its highest-ever ratings in the UK, according to ratings agency BARB. The average audience across the two channels was 650,000, with 2.3 million tuning in across the two-hour ‘as live’ broadcast from Glasgow, Scotland.

In Europe, the Middle East and Africa, Viacom saw subscriber gains among its core channel brands, with MTV’s audience rising year-on-year from 313.7 million to 315.5 million and Nickelodeon’s climbing from 219.9 million to 235.2 million.

“The company significantly broadened its presence in Africa, both gaining increased distribution for MTV and launching Nick Jr., Nicktoons, and BET International in South Africa. Viacom now delivers more television channels than any other international programmer on the continent, and it is well positioned to capitalise on the progress of the African market,” said Viacom.

It added that its channels business also launched 12 new apps in the quarter, including new TV Everywhere apps for iOS and Google Play and premium apps for iPad, iPhone, Amazon and Google Play.

Overall in the quarter, revenues were up 9% to US$3.99 billion, adjusted operating income was flat compared to the prior year at US$1.21 billion, while adjusted net earnings from continuing operations were down slightly to $729 million.