Ads and Fees Lift Viacom to a 37% Increase in Profit

The company’s net earnings of $574 million, or 97 cents a share, were up from $420 million, or 69 cents a share, in the same quarter last year. The company reported revenues of $3.77 billion, up from $3.27 billion.

Like the other major media companies that reported second-quarter earnings that exceeded expectations this week, Viacom credited a sturdy television advertising market, solid revenues from subscriber fees and emerging revenues from digital distributors like Netflix.

“We have always thrived on competition in the distribution arena, and there’s now more competition than there has ever been, and it’s growing,” said Philippe Dauman, the chief executive of Viacom. He added that there was increasing competition for digital distribution in international markets as well as in the United States.

Media companies like Viacom are increasingly accepting online distributors like Netflix, Amazon and Hulu as new bidders for their content — especially for the old content in their libraries that does not compete directly with what is currently on their television channels. Viacom already has licensing deals with Netflix and Hulu, and Mr. Dauman said Friday that discussions were under way with other potential licensees.

“As a result of these new deals, we have set a new higher base for our affiliate revenues this year and we expect to continue to increase those revenues from this higher base at a high single- to low double-digit annual rate every year for the foreseeable future,” Mr. Dauman said on a conference call with analysts.

In the quarter, Viacom’s cable networks had revenues of $2.39 billion, up 16 percent versus the same quarter last year, in large part because of the strength in advertising.

Mr. Dauman singled out several scripted television series for praise, like TV Land’s “Happily Divorced” and VH1’s “Single Ladies,” and he noted that the ratings at MTV had increased year-over-year even though new episodes of “Jersey Shore,” the channel’s biggest show, were not televised in the United States in the quarter. (Both this year and last year, the series skipped the spring quarter.)

Profit growth was up sharply in the cable division, but down in the Paramount filmed entertainment division, largely because of the “timing and mix of theatrical releases,” the company said in its earnings statement. Still, revenues for filmed entertainment were up 13 percent, to $1.4 billion.

Looking ahead, Mr. Dauman acknowledged that Viacom was preparing for an end to its film distribution deal with DreamWorks Animation, which started in 2006 and is expected to end in 2012. Last month, Viacom said it would start its own animation division. “We are proceeding on the operating assumption that we will not be extending the DreamWorks Animation deal beyond next year,” Mr. Dauman said Friday.

Asked about perceived friction with the DreamWorks chief executive Jeffrey Katzenberg, Mr. Dauman dismissed it: “The relationship is very good,” he said, “and the only issue is what DreamWorks Animation wants to do strategically as this deal expires, and how that fits in with our own strategic objectives.”

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