Viacom's CEO credited increased spending on research for
improved ratings performance at its cable networks.
"It's all about investing in the right research, the right
programming, the right marketing and the right people," said Viacom CEO Philippe
Dauman during the company's first quarter earnings call Thursday morning.
Viacom's first quarter earnings fell as higher revenue at its cable networks
group was offset by declines at its movie business.
Ratings at Viacom's cable networks including MTV and BET
have been jumping thanks to more successful original programming including Jersey Shore and The Game.
But Dauman said the company has increased its research
investment by more than 15% over the past three years.
"We're doing more consumer insights work than ever before at
all our brands," he said. "Research informs everything we do: how we position our
brand, how we invest our content dollars, how we program each network, how we
develop our marketing plans, even how we window and monetize content across new
platforms."
The result of all that research shows up as more animation
on Comedy Central, new scripted sitcoms on TV Land and CMT, a broader mix of
scripted and unvarnished reality programming for MTV and more scripted programs
for BET.
"You'll see all those genres growing on our networks today
because of our continued investment in programming and programmers," Dauman
said, noting that programming spending has increased 25% since he replaced Tom
Freston as CEO.
"We're also sharing those insights further upstream in the
content development process, not just internally, but also with outside
producers with whom we work."
In the second quarter, Viacom's Media Networks group, which
includes MTV, Comedy Central, BET and Nickelodeon, reported a 7% increase in
operating income. Advertising and affiliate revenues were higher while the
company continued investing in programming.
Revenues rose 6% to $2.4 billion as a 10% increase in domestic ad revenues and
a 10% increase in global affiliate revenue were offset by a 17% decrease in
ancillary revenues.
"We have ground breaking programming across every screen and the audiences are
responding in impressive numbers," said Dauman. "This put our media networks in
extremely good position as we prepare for the upcoming advertising upfront."
Among the shows driving ratings growth, Dauman mentioned Skins, MTV's controversial show in which
teen actors depict drug use and sexual activity, repelling many major
advertisers.
Viacom expects ad revenues to have double digit growth again
in the second quarter, driven by a strong scatter market, "and we are looking
forward to a particularly robust upfront this spring."
In the last few years, Viacom's networks have gotten smaller
price increases than other programmers in the upfront, but with its new crop of
shows and higher ratings, the company expects gains in both volume and pricing.
Overall, Viacom's first quarter earnings were $610 million,
or $1 a share, down 12% from $694 million, or $1.14 a share, in line with Wall
Street expectations.
Revenues fell 5% to $3.8 billion.
