Earnings: Viacom Q2 Profits Slip 1 Percent; Revs Up 13 Percent; Expects To Surpass Digital Rev Goals

Viacom (NYSE: VIA) reported that profit dipped 1 percent in Q2, coming in at $434 million, or 63 cents per share, down from last year’s $437.3 million, or 61 cents per share. Viacom did rise above Wall Street’s expectations of 50 cents per share, according to Reuters Estimates. Revenues grew 13 percent to $3.19 billion. Also, operating income rose 6 percent to $702 million, which includes the impact of roughly $11 million of Media Networks restructuring charges. Other results from Viacom’s Q2 results included:
— The company claimed an average of 85 million unique visitors per month globally, a 68 percent increase over Q206. The company did not break out digital revenues.
— Media networks’ revenue rose 10 percent to $1.9 billion from $1.7 billion a year earlier. More to come. Earnings release | Webcast
Update: From the earnings call: CEO Philippe Dauman: Viacom is well on its way to exceeding its goal of reaching $500 million in digital revenue by the end of this year. Dauman announced the $500 million digital revenue target earlier this year.
Digital upfront deals: In response to a question regarding digital’s share of Viacom’s upfront revenues from Merrill Lynch senior media analyst Jessica Reif Cohen, Dauman declined to offer specifics, saying only that the company just closed a “multi-million digital deal with a major advertiser, double what they previously spent.”
Shaping digital strategy: “Our digital strategy is not only about delivering near-term growth, but in building a sold, sustainable platform for long-term success. We are vertical content company with a focus on our key demos and our digital strategy mirrors this. Our television assets are a huge competitive advantage for us. All of our brands have a 360 degree development process. When we create content, it is not only for the TV screen, but for every platform.” He pointed to Comedy Central’s Indecision2008.com, which provides an irreverent take on the presidential race. The site will aggregate clips from Comedy Central’s on-air shows, as well as producing original broadband entertainment and user-generated content. “Over the next year, we will be launching hundreds of new websites, each tied to one of our branded shows or a character or other related interest. As we link these targeted sites on a common platform, we will draw highly dedicated, enthusiastic audiences, which in turn, attract a premium in advertising revenues.”
More virtual worlds: No questions about why Viacom skipped Club Penguin. Over the next year, Viacom plans to expand its presence in virtual worlds, casual online gaming and the mobile arena. Dauman said that Nickelodeon’s virtual community site, Nicktropolis, currently has 4.5 million registered users and nearly 1 million users have registered on one of MTV’s virtual worlds, which include The Hills and Virtual Laguna Beach. Viacom plans to launch several more virtual worlds before the end of the year. Dauman: “We’re really just beginning to tap into the revenue streams that virtual worlds offer, with advertisers selling virtual Nikes on The Hill and virtual neo-pet accessories for very real dollars.”
Casual gaming promises growth: GameTrailers, AddictingGames and Quizilla are generating “high, double-digit growth each quarter,” Dauman said. He noted that last month, Nickelodeon Kids and Family Group pledged to invest $100 million over the next two years to develop and distribute casual gaming sites and platforms. “With 86 percent of kids aged 8- to 14 playing games online, this is another great example of how we plan to extend our brand to new revenue generating opportunities.” Looking towards the holiday season, Viacom has high expectations for Rock Band, a joint production between MTV and game developer Electronic Arts that will offer new, full-length albums and digitally distributed games for sale every week following the launch. Dauman said the multi-player platform “will have very important online extensions and serve as the foundation for many applications, creating significant new business opportunities for Viacom.”