Viacom seeking more profit from overseas

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Philippe Dauman, Viacom’s new chief executive, is launching a campaign to improve profitability at the US media group’s far-flung international assets, which could lead it to scale back its ownership of some television networks.

After a sustained period of international expansion, Viacom’s MTV Networks cable division boasts 130 television stations around the world and now contributes nearly a quarter of the company’s total revenues.

But Mr Dauman, who replaced Tom Freston two months ago, said on Thursday that one of his top priorities would be to increase the margins at those businesses.

“We’ve done a great job establishing our brands… Now I want to drive profitability. That will be a major focus for me,” he told investors as the company announced a 16 per cent decline in third-quarter earnings.

As part of the international effort, Viacom may licence its networks in certain markets rather than owning them outright. The company has already taken that approach in Indonesia and Turkey while at the same time taking full ownership of its networks in Japan.

“What I want to do is look really meticulously at the different countries and regions we are in,” Mr Dauman said.

For the quarter, Viacom earned $356.8m, or 50 cents per share, down from $423.3m, or 56 cents per share, a year ago.

The core cable business continued its strong growth, with revenues increasing 10 per cent to $1.84bn and outstripping many analysts’ expectations.

But this was offset by a $6m loss at the Paramount film studio, which earned $108m during the same period last year on the back of blockbuster War of the Worlds. Viacom was also hit by a $62m compensation charge related to Mr Freston’s departure.

The company announced on Thursday that another top executive, Michael Dolan, its chief financial officer, would also be leaving. Mr Dolan’s departure had been expected since Mr Duaman took over in September and named Thomas Dooley as his chief administrative officer. Mr Dooley will now add the chief financial officer’s responsibilities to his portfolio.

Mr Dauman said that Viacom could achieve $500m in digital revenues next year, 12 months ahead of schedule.

He also reiterated his vow that any new media acquisitions by the company would be modest in size.

“I will not authorise a deal unless I see a very clear return on capital,” Mr Dauman said, adding that executives would have to put an integration plan in place before making any acquisitions.

Mr Dauman also hinted that Viacom could enter the television production business, a division that went with CBS when it split from Viacom at the beginning of the year.

Such a move would mirror CBS’s stated intention to enter film production, which remained with Viacom.

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