New York: Viacom Inc. (NYSE: VIA, VIA.B) has reported higher operating income and net earnings from continuing operations for the quarter ended September 30, 2010, reflecting strong gains in advertising, affiliate and television license fees.
Revenues in the quarter ended September 30, 2010 rose 5% to $3.33 billion reflecting growth in Media Networks and Filmed Entertainment. Adjusted operating income of $837 million was up 4% over the prior year's adjusted results, with growth in Media Networks driven by an 8% rise in domestic advertising revenues and 10% growth in worldwide affiliate fees, partially offset by lower profits in the Filmed Entertainment segment due to the timing and mix of theatrical releases. Adjusted net earnings from continuing operations attributable to Viacom grew 7% to $461 million and adjusted diluted EPS from continuing operations were $0.75, a 6% increase over the prior year's adjusted results of $0.71 per share.
As previously announced in mid-2009, Viacom changed its fiscal year end to September 30 commencing with the fiscal year 2010. As a result, Viacom's fiscal year 2010 comprises the nine-month period of January 1, 2010 through September 30, 2010.
Viacom also announced that it plans to sell Harmonix, which developed the Rock Band music video game franchise. Accordingly, the Company reclassified the business as a discontinued operation and has recast its results from previous periods to reflect this change.
Revenues for fiscal 2010 increased 1% to $9.34 billion as growth in affiliate and advertising revenues was partially offset by a decline in the Filmed Entertainment segment due primarily to fewer home entertainment releases. Adjusted operating income was up 14% to $2.21 billion for the year, driven by solid growth in Media Networks and a $94 million improvement in Filmed Entertainment versus the prior year. Adjusted net earnings from continuing operations attributable to Viacom grew 20% to $1.15 billion and adjusted diluted earnings per share were $1.88, up 20% over the prior year's adjusted results of $1.57 per share.
Sumner M. Redstone, Executive Chairman of Viacom, said, "Viacom once again has delivered strong results that reflect the enduring value of our brands, our focused strategy and our disciplined management team. We continue to benefit from the improving economy and look forward to even brighter days ahead."
Philippe Dauman, President and Chief Executive Officer of Viacom, said, "We are very pleased with the financial and operational results we delivered in fiscal 2010, which were the direct result of our continuing creative success. With a strong balance sheet and increasing free cash flow, we are delivering on our commitment to return capital to our shareholders with the institution of a quarterly cash dividend in the second quarter followed by the resumption of our stock repurchase program in October.
"Investing in our content and our brands has been and will continue to be the cornerstone of Viacom's strategy. We never wavered from it even as we managed through the global recession. As a result, many of our cable networks today are achieving new ratings highs and producing hit shows that feed the cultural dialogue in the U.S. and abroad. This creative success coupled with the improving economy has fueled our advertising revenues, which were up 8% in the U.S. this quarter, our third consecutive quarter of sequential improvement.
Quarterly revenues of $3.33 billion increased 5% from $3.17 billion in the prior year. Media Networks generated $2.13 billion in revenues, an 8% improvement from the prior year. This result includes significant growth in advertising revenues, which were up 7% on a worldwide basis to $1.17 billion. Domestic ad revenues continued to benefit from a strong scatter market, rising 8% in the quarter. Worldwide affiliate revenues grew 10% to $799 million. Ancillary revenues increased 1% in the quarter to $160 million. Filmed Entertainment revenues grew 1% in the quarter to $1.23 billion driven primarily by an 18% increase in television license fees to $372 million as well as a 3% improvement in theatrical revenues to $372 million. Worldwide home entertainment revenues of $406 million represent a 13% decline over the prior year's result, primarily due to fewer releases.
Fiscal 2010 revenues of $9.34 billion were up 1% from the $9.24 billion generated in the comparable nine-month period in 2009. Media Networks revenues grew 7% to $6.08 billion driven primarily by higher affiliate and advertising revenues. Worldwide advertising revenues increased 5% to $3.25 billion, reflecting strengthening trends in the global advertising market. The Company delivered 10% growth in its worldwide affiliate revenues to $2.37 billion for fiscal 2010. Worldwide ancillary revenues increased 11% to $454 million, principally reflecting growth in the Company's online content licensing fees. Filmed Entertainment revenues declined 9% to $3.36 billion for the fiscal year primarily due to fewer home entertainment releases. Home entertainment revenues were down 30% to $951 million, reflecting five releases in fiscal 2010 versus 12 in the prior year's comparable period, as well as lower catalog sales. This decline was partially offset by growth in theatrical revenues, which increased 4% to $1.28 billion due primarily to stronger performance from the Company's tentpole films year-over-year. Worldwide television license fees were flat at $938 million.