Viacom Inc. (VIA.B) today declared mixed financial results for the first quarter of 2011.

Quarterly net income from continuing operation was $620 million or $1.02 per share compared to a net income of $693 million or $1.14 per share in the prior-year quarter. However, first quarter of fiscal 2011 EPS of $1.02 beat the Zacks Consensus Estimate of 99 cents.

Quarterly total revenue was $3,828 million, down 5% year over year. This was well below the Zacks Consensus Estimate of $4,139 million. Significant decline in top-line was primarily attributable to extremely poor home entertainment businesses. Quarterly operating income was $1,040 million, down 13% year over year driven by the lower profit from the Film Entertainment segment.

During the reported quarter, Viacom repurchased 13.3 million common shares for $519 million. At the end of the first quarter of fiscal 2011, Viacom had $911 million of cash & cash equivalent and $6,752 million of outstanding debt on its balance sheet compared to $837 million of cash & cash equivalent and $6,752 million of outstanding debt at the end fiscal 2010.

Media Networks Segment

Quarterly revenue of $2,380 million was up 6% year over year. This was mainly driven by solid growth in affiliate fees and advertising sales. Worldwide affiliate revenues grew 10% in the reported quarter. Domestic and Worldwide advertising revenue increased by 10% and 7% respectively from the prior-year quarter.

This was in line with other media companies such as News Corp. (NWSA) and Time Warner Inc.(TWX). However, worldwide Ancillary revenue declined 18% year over year. Quarterly operating profit was $1,051 million, up 7% year over year.

Filmed Entertainment Segment

Quarterly revenue of $1,497 million was down 16% year-over-year. Worldwide home entertainment revenue was down 44% year over year. Theatrical revenue was up 28.8% year over year supported by strong box office performance of Paramount Pictures. Ancillary revenue increased 56% year over year. Quarterly operating profit was $68 million, down 77% year over year.

Recommendation

We maintain our long-term Neutral recommendation for Viacom. Currently it is a short-term Zacks #3 Rank (Hold) stock.

 
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