Benzinga  6 hrs ago  Comment 
Wunderlich thinks CBS Corporation (NYSE: CBS) is a worthly Buy whether the company acquires Viacom, Inc. (NASDAQ: VIAB) or not. The firm initiated coverage with a Buy rating even on a standalone basis and set a target price of $72 implying upside...
MarketWatch  Oct 17  Comment 
Time Warner Inc. was downgraded to neutral from outperform at Wedbush Securities, which cited concerns that the stock was overvalued following the recent rally. At the same time, Analyst James Dix upgraded Viacom Inc. to outperform from neutral,...
Wall Street Journal  Oct 14  Comment 
Viacom said Friday it has hired financial advisers to help evaluate a potential deal to merge with CBS.
newratings.com  Oct 14  Comment 
WASHINGTON (dpa-AFX) - Viacom Inc. (VIAB, VIA) announced the Special Committee of its Board has retained Morgan Stanley, Allen & Company and LionTree LLC as financial advisors in connection with the Special Committee's evaluation of the...
Forbes  Oct 13  Comment 
Shari Redstone assumed control of Viacom by forcing CEO Philippe Dauman to resign and firing his supporters on the Board. Public shareholders have had to watch the drama unfold from the sidelines and trust that the Redstone family would act in the...
MarketWatch  Oct 13  Comment 
Viacom Inc. on Thursday saw its class A voting shares and class B non-voting shares gain more than 1% after the stock was upgraded to buy from underperform by Bank of America Merrill Lynch analysts led by Jessica Reif Cohen. Viacom was also...
Benzinga  Oct 13  Comment 
Benzinga  Oct 13  Comment 
  Bank of America raised Viacom, Inc. (NASDAQ: VIA) price target from $37 to $44. Viacom shares closed at $39.55 on Wednesday. D.A. Davidson raised the price target for Orion Group Holdings Inc (NYSE: ORN) from $6 to $8. Orion Group...
Forbes  Oct 12  Comment 
Recently, Viacom announced that its portfolio of premium networks will launch on the new AT&T streaming service DirectTV Now. Starting in the fourth quarter of 2016, Viacom’s popular networks, such as Comedy Central, MTV, Nickelodeon and...
Reuters  Oct 11  Comment 
CBS Corp Chief Executive Leslie Moonves should get five years without interference from Sumner Redstone's family if the media company is merged with Viacom Inc , investor Mario Gabelli told CNBC on Tuesday.

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Viacom, Inc. NYSE:VIA is a leading global entertainment content company. Viacom owns and operates some of the world's best known media networks and film production studios including networks such as MTV, BET, Nickelodeon and Spike TV as well as filmed entertainment companies including Paramount Pictures and DreamWorks Pictures. Viacom's content reaches over 520 million households world wide in over 160 countries and territories. In 2005 Viacom became a stand-alone public company when it separated from CBS (CBS). In 2007 the company earned $13.82 billion in revenues, an increase of 18% from 2006.

Business Segments

Viacom operates through two separate business segments in the media industry. andThe first is their media networks segment which includes television networks as well as digital properties both domestic and international. The second business segment is known as Filmed entertainment and is responsible for the production, promotion and distribution and licensing of feature films.

Media Networks

Viacom's media networks segment controls over 150 television channels and more than 300 digital properties, which include online, broadband and mobile television services. The media networks segment generates revenue from three sources: The sale of advertising time on cable and digital networks, from fees that are payed to cable network television operators and satellite television operators and other distributors and finally ancillary revenue which includes the sale of consumer products including video games, as well as the licensing of its content to third parties. In 2007 the media networks segment was responsible for $8.10 billion in revenues earned.

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Filmed Entertainment

The filmed entertainment segment is responsible for the production, financing and distribution of motion pictures. Viacom's filmed entertainment segment owns and operates Paramount Pictures, Paramount Vantage, Paramount Classics, DreamWorks Pictures, MTV Films and Nickelodeon movie brands. Films are generally released in theaters in the United States and abroad and then released to DVD and licensed to Video-On-Demand distributors and other third parties for further distribution. All revenues from these various forms of distribution are recorded under the filmed entertainment segment. In 2007 filmed entertainment earned %5.48 billion in revenue and increase of $1.2 billion, or 28%, from 2006. The process of creating, releasing and later licensing filmed entertainment is broken down into four segments that create different revenue streams. These segments are home entertainment, television licensing and ancillary revenues.

  • Theatrical: Revenues from the theatrical release of Viacom's films are recorded in this segment. In 2007 theatrical revenues accounted for $1.47 billion of the company's total revenues, an increase of 69% from 2006. This increase was largely due to the successful release of the films Transformers and DreamWorks' Shrek the Third, which performed better than comparable films released in 2006. A complete list of Viacom's theatrical releases can be seen below.
  • Home Entertainment: Revenues from the distribution of filmed entertainment to households through DVD sales are recorded under the home entertainment segment. Home entertainment earned $2.49 billion in 2007, an increase of 18% from 2006. The increased revenues were largely due to the success of many DVD releases during the year, again included Transformers and Shrek the Third.
  • Television Licensing Fees: Once films are released in home entertainment formats (and thus out of theaters) Viacom sells the rights to distribute its content to various third parties. Television networks, video-on-demand services, pay and free cable services and in some cases airlines and hotels are all service providers that pay Viacom for the rights to air the company's films. Television licensing fees also increased in 2007, returning $1.29 billion, 15% higher than 2006.
  • Ancillary Revenue: Revenues from studio revenues, consumer product licensing and the distribution of filmed entertainment through new online and mobile platforms are recorded as ancillary revenue in the filmed entertainment segment. In 2007 these revenues accounted for $221.8 million, an increase of 30% from 2006.

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Theatrical Releases 2007
Quarter Title
First Quarter Freedom Writers
Reno 911: Miami
Black Snake Moan
Blades of Glory
Second Quarter Disturbia
Year of the Dog
A Mighty Heart
Third Quarter Transformers
Arctic Tale
Hot Rod
Into the Wild
Fourth Quarter The Heartbreak Kid
Things We Lost in the Fire
Margot at the Wedding
Kite Runner
Sweeney Todd: The Demon Barber of Fleet Street
There Will Be Blood
No Country for Old Men
DreamWorks Animation Releases Shrek the Third
Bee Movie
Source: Annual Report.

Trends and Forces

  • Intellectual Property: Piracy in the entertainment industry is a serious concern for Viacom. The rise of the internet has made it increasingly easy for consumers to gain access to content without paying anything. As a result, companies like Viacom don't see any revenue for the media content that they produce. Increased piracy regulations in the U.S. and abroad (particularly in China, where such regulations are very lax) could be very helpful for Viacom. If piracy is not controlled or strongly regulated in the future Viacom could see serious losses from the intellectual property violations.
  • Success of Content: The success of the programming that Viacom licenses to generate revenue is very central to the amount they can charge in affiliate fees. These fees are determined through negotiations with cable and satellite distributors and the more successful a program is, the larger the fee Viacom can charge for the licensing. As the entertainment industry is extremely fast paced, it is essential that the content Viacom produces keeps up with what is currently popular.
  • Decline in Cinema Viewing: Most movies produced today are break-even projects for Viacom and its competitors. As the costs of producing major block buster movies continue to rise the revenues from these movies must also increase in order for the projects to remain worthwhile. In recent years revenues from theater releases have fallen, causing high cost projects to become less attractive. This decline in cinema attendance is coupled with an increased demand in the DVD market. While Viacom is a major player in both areas, it does rely strongly on its theatrical release revenues.


Viacom competes directly with other major media conglomerates including Time Warner (TWX) and Walt Disney Company (DIS). The below table compares Viacom's revenues, market capitalization and operating margin with both Time Warner and Disney. While Viacom's revenues and market cap are significantly smaller than those of its competitors it does maintain an advantage in operating margin.

Comparison to Competitors in 2007
Company Revenues ($ billions) Market Capitalization ($ billions) Operating Margin
Viacom Inc. (VIA) $13.42 $25.17 21.87%
Time Warner (TWX) $46.48 $51.53 18.78%
Walt Disney Company (DIS) $36.38 $58.83 19.63%
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