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Thursday, May 3, 2012

Raves for "The Avengers". Viacom profits up at your expense. Bloomberg wins legal case against Comcast. CNN Radings in the dumps.

Photo:  Eddie Murphy plays a cad named Jack in the DreamWorks comedy "A Thousand Words," released during the first quarter by Paramount Pictures.   Credit: Bruce McBroom / DreamWorks Pictures 

From the LA Times Company Town Blog. Click here for the latest industry news.

Higher Cable fees drive Viacom profits up at viewers expense. Viacom Inc.'s second-quarter profit soared 56%, thanks to higher fees from pay-television operators and lower expenses at the company's Paramount Pictures movie studio.

For the quarter ended March 31, Viacom earned $585 million, or $1.07 per share, up from $376 million, or 63 cents a share, in the same period in 2011. Revenue grew 2% to $3.33 billion.

"Across our divisions we sharpened our focus on execution and efficiency while continuing to invest in programming that connects with audiences worldwide," Viacom Chief Executive Philippe Dauman told analysts in a Thursday morning conference call.  "Distribution continues to be a strong and steady driver for Viacom."

The New York-based media company's earnings exceeded analysts' estimates while revenue was largely within expectations. The company, controlled by billionaire Sumner Redstone, also spent about $700 million during the quarter to repurchase 14.7 million shares.

The bulk of the company's earnings came from its Media Networks unit, which includes cable channels MTV, Nickelodeon, Comedy Central, BET, VH1 and TV Land.  Revenue generated by cable channels grew 5% to $2.2 billion, driven by an increase in affiliate fees paid by cable and satellite television operators.  Affiliate fee revenue was up 17%.

Media networks' operating income climbed 11% to $893 million. Domestic advertising revenue inched up 1%, while foreign advertising revenue remained flat.

"We are seeing encouraging signs of a strengthening ad market," Dauman noted.

At the Los Angeles-based Paramount Pictures, which is celebrating its 100th anniversary this year, revenue dropped 5% to $1.17 billion.  The company attributed the lower revenue to a "less widely distributed mix of releases during the quarter," which included the highly profitable "The Devil Inside" and DreamWorks Pictures'  Eddie Murphy vehicle, "A Thousand Words," which flopped.

Theatrical revenue was down 19% to $326 million for the quarter.  The division was helped during the quarter by carry-over receipts from "Mission Impossible: Ghost Protocol," with Tom Cruise, which was released in the previous quarter.

Operating income at the film studio nearly tripled to $115 million, up from $39 million in the year-earlier period. The company said the studio's higher margin came from lower distribution costs.
"We are being disciplined in managing our expenses," Chief Operating Officer Thomas Dooley told the analysts.

The Skinny: Was having a Twitter debate over whether "Mad Men" is better than "The Sopranos." Here's how I know "The Sopranos" is better. Years from now I don't think I'll be going on YouTube to look at "Mad Men" clips the way I do with "The Sopranos." Thursday's headlines include a rave review for "The Avengers," Viacom's profits are way up, Bloomberg won a legal fight against Comcast and CNN's rating woes continue.

 Photo: A scene from upcoming DreamWorks Animation film "Madagascar 3: Europe's Most Wanted," to be released by Paramount Pictures in June. Credit: Paramount Pictures/DreamWorks Animation

Dream Works Annimation revenue jumps 25%. DreamWorks Animation, the Glendale studio behind the "Shrek" and "Kung Fu Panda" movies, saw its revenues jump 26% to $136.1 million in the first quarter.

The company said it earned a profit of $9.1 million, or 11 cents a share, the first quarter of the year, a 3% increase over last year, reflecting international ticket sales from the Shrek spinoff, "Puss in Boots." The movie grossed $554 million worldwide since its release last October.

The results exceeded the consensus estimate among analysts, who had forecast a profit of 9 cents per share and revenues of $134 million.

Investors will be closely watching the performance of DreamWorks' next release, "Madagascar 3: Europe's Most Wanted," which will debut June 8. The film will compete with Disney's animated feature "Brave," which will also hit theaters in June.

Another question mark for investors is whether DreamWorks will seek to release its own movies once its current distribution deal with Paramount Pictures expires later this year. DreamWorks has signaled that it may chose to distribute its own movies. Last year, the studio tapped respected distribution veteran Chuck Viane to advise the company on its options.

“It would be premature to presume that self-distribution is not a serious and viable option for us,’’ DreamWorks Animation Chief Executive Jeffrey Katzenberg told analysts, adding that he expected to reach a decision by Labor Day.

Katzenberg said he was “very excited” about opportunities to expand business in China, where the company recently announced plans to build a studio in Shanghai with two state-owned Chinese media companies.

He declined to comment on letters DreamWorks and several other studios received from federal regulators investigating allegations of inappropriate dealings with Chinese officials.

DreamWorks' quarterly results were released after the markets closed on Wednesday.  Amid concerns of slowing DVD sales, DreamWorks' shares have fallen about one third in the last year, closing Wednesday at $18.46, down 2%.

Tennis channel
 Photo: Tennis Channel's Bill Macatee and Martina Navratilova, center, interview Ana Ivanovic. Credit: Fred Mullane

Comcast-NBC-Universal may prove too large for Tennis Channel to score. Cable giant Comcast Corp. appears to be headed for a tie-breaker in its long-running dispute with the small, independently owned Tennis Channel.

In December, a Federal Communications Commission administrative judge issued a tentative ruling that Comcast had discriminated against the Tennis Channel by putting it at a competitive disadvantage.
After winning that ruling, the Santa Monica network demanded that Comcast immediately add the channel to Comcast's most widely distributed programming package. The move, which Comcast has been resisting, would make Tennis Channel available to nearly all of Comcast's 22 million cable subscribers.

But on Wednesday the FCC general counsel said that the full FCC would decide the matter and that Comcast was not required to move Tennis Channel at this time.

The dispute, which began nearly three years ago, centers on Comcast's refusal to move the Tennis Channel to a less exclusive environment.

The Philadelphia company has said it placed the Tennis Channel in the sports tier as part of an agreement between the two companies when Comcast agreed to provide carriage.  However, Comcast appeared to run afoul of the rules because it offers the sports channels that it owns, the Golf Channel and NBC Sports (formerly known as Versus), in the basic programming package.

The Tennis Channel has argued that its location unfairly limits its revenue potential because channels receive fees from cable operators based on number of subscribers.

If Comcast loses the case, it would be the first time that a cable operator was found in violation of federal anti-discrimination program carriage rules, which were established by the agency in 1993. Comcast lost a similar dispute Wednesday, this one with Bloomberg.

On Wednesday, the FCC General Counsel Austin C. Schlick said the full commission should settle the Tennis Channel score.  It was not clear when the commission would make the final call.

"The interim stay granted by the Office of General Counsel regarding the Tennis Channel is a welcome development, and we hope the full commission will follow suit," Comcast said in a statement. "There were procedural and substantive flaws in the [administrative judge's] decision, and we continue to believe it should not be upheld."

For its part, the Tennis Channel said the interim stay didn't change the administrative judge's findings. Instead, it was "simply a continuation of the status quo while the commission decides the procedural question.... We are pleased that the commission continues to move forward in resolving this dispute."

Bloomberg beats Comcast. The Federal Communications Commission decided in favor of Bloomberg TV in its bitter fight with Comcast Corp. over channel positioning. At issue was where Bloomberg TV was placed on Comcast cable systems in relation to where Comcast-owned CNBC and MSNBC were located. Comcast will appeal the decision. Details from the Los Angeles Times and Multichannel News.

Daily Dose: Want to learn how to get coffee, kiss butt and be quiet while being yelled at? Well, now there is a boot camp for aspiring production assistants. That's right, for a mere $145 the Quixote boot camp will teach you the "basic dos and don'ts while on set." Here's a link to the Groupon coupon (of course) for this once in a lifetime opportunity.

The Avengers will be huge
 Photo: "The Avengers." Credit: Marvel.

You can run but you can't hide. We don't normally lead off with movie reviews at the Morning Fix, but with so much attention being focused on "The Avengers," it seems appropriate. In the Los Angeles Times, critic Kenneth Turan says "The Avengers" is a "behemoth of a movie" that is " smartly thought out and executed with verve and precision." How good is it? Turan says viewers may not even notice that the movie runs almost 2 1/2 hours. Guess I know what I'm doing this Saturday.

Give Cartman a raise! Viacom, the entertainment giant whose holdings include cable channels MTV, Comedy Central, Nickelodeon and BET as well as movie studio Paramount Pictures, released its second quarter results early Thursday morning and said profits jumped 56% to $585 million. The gains were attributed to an increase in subscription fees at its cable networks and a strong  quarter from Paramount Pictures. Early analysis from Bloomberg and Reuters. The Wall Street Journal also weighs in on Nickelodeon's ratings woes.

Bad news. CNN's ratings hit a new low in April. The cable news channel continues to struggle against opinion-oriented rivals Fox News and MSNBC in prime time. One of CNN's problems has been its inability to create shows that will attract viewers when there isn't a breaking news story happening. Of course, CNN still remains very healthy from a financial standpoint. More from the New York Times.

There's an opening at Disney's movie unit. Former Disney Chief Executive Michael Eisner wants to launch his own movie and television production company. According to CNBC, Eisner is looking to raise about $800 million to get the venture off the ground and will put $20 million of his own money into the start-up. Guess the job as head of Disney Studios, succeeding Rich Ross, doesn't hold much appeal.

Inside the Los Angeles Times: A look at Zynga Chief Operating Officer John Schappert's strategy to keep the social network gaming company on top. The movie "Marigold Hotel" is going after an audience Hollywood usually ignores -- seniors.

-- Joe Flint

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