English Entertainment
Forex impact lowers Viacom Q2-2015 revenue
BENGALURU: Viacom Inc. reported three per cent increase in its Media Network revenue to $2452 million in the quarter ended 31 March, 2015 (Q2-2015, current quarter) from the $2375 million reported for the corresponding year ago quarter. The $77 million increase was more than offset by a two per cent negative impact of foreign exchange (forex) and a 21 per cent decline in revenue to $659 million in Q2-2015 from 831 million in Q2-2014. Overall, the company’s revenue in Q2-2015 declined three per cent to $3078 million as compared to the $3174 million reported for Q2-2014.
The company reported a six per cent lower adjusted operating income (excluding restructuring and programming charges) of $822 million in the current quarter as compared to the $872 million in Q2-2014. Factoring in restructuring and programming charges of $784 million, the company’s adjusted operating income for Q2-2015 was just $38 million.
The company reported a loss attributable to Viacom of $210 million in Q2-2015 as compared to a profit of $502 billion in Q2-2015.
Viacom executive chairman Sumner M. Redstone said, “Viacom’s outstanding brands deliver great entertainment content on every screen, from film to television, mobile and beyond. We have the global footprint and the expert leadership to continue our success.”
Viacom president and chief executive office Philippe Dauman added, “We are deeply committed to investing in more and more original content, expanding in international growth markets, where we are launching networks at a rapid pace, and adapting to changes in technology and consumer behavior. In the quarter, Viacom’s Media Networks delivered higher advertising and affiliate revenues, and new hits like Lip Sync Battle set the stage for even more exciting, original programming across our networks. Paramount Pictures also continues to be a proven hit maker. The SpongeBob Movie: Sponge Out of Water was the first title from our brand new Paramount Animation division and a box office success around the world, and we look forward to the releases of Terminator Genisys and Mission: Impossible – Rogue Nation this summer.
“With our strategic realignment largely complete, Viacom is in excellent position to take full advantage of the many opportunities in the rapidly evolving media environment. The $175 million in savings to be achieved in fiscal 2015 and substantial ongoing annual benefit will allow us to move efficiently through the second half of the year and beyond,” added Dauman.
During the six month period ended 31 March, 2015 (6M-2015), Viacom revenue improved slightly by 0.8 per cent to $6422 million from $6371 million in 6M-2014. Comprehensible Income attributable to Viacom for 6M-2015 was $169 million, which was less than a sixth (1/6.4 times) the $1082 reported for 6M-2014.
Media Networks
Media Networks revenues increased $77 million, or three per cent, due to higher advertising revenues in Q2-2015, driven by the acquisition of Channel 5 Broadcast Limited in September 2014, and affiliate fees, partially offset by the impact of foreign exchange. Excluding an unfavourable four per cent and two per cent impact of foreign exchange, Filmed Entertainment revenues declined 17 per cent and Media Networks revenues increased five per cent, informs Viacom.
Media Networks adjusted operating income declined $46 million, reflecting an increase in programming and promotional expenses, partially offset by higher revenues.
Within Media Networks, advertisement revenues increased four per cent in Q2-2015 to $1172 million from $1124 million in Q2-2014, Affiliate fees improve three per cent to $1146 million in Q2-2015 from $1114 million in Q2-2014, while Ancillary revenue reduced three per cent to $134 million from $137 million in the corresponding year ago quarter.
Filmed Entertainment
The company says that lower Filmed Entertainment segment revenue was because of lower license fees and home entertainment revenues. Filmed Entertainment adjusted operating income declined $10 million due to the number and mix of available titles in the television licensing windows.
Within Filmed Entertainment, Theatrical revenues went down $24 million or 10 per cent to $205 million in Q2-2015, on the back of lower mix of prior period releases and 35 per cent lower international theatrical revenues. The Sponge Bob Movie: Sponge out of water and Selma helped spike revenues up by $41 million. Worldwide home entertainment revenues decreased $63 million, or 25 per cent, to $194 million in the quarter. Revenues from current quarter titles decreased $32 million driven by the mix of releases. Domestic home entertainment revenues decreased 16 per cent and international home entertainment revenues decreased 35 per cent. Foreign exchange had a seven percentage point unfavourable impact on international home entertainment revenues.
UK: The aerial is losing its grip. As broadband becomes the default way Britons watch television, the UK is edging towards a decisive, and divisive, question: should Freeview be switched off by 2034? The issue, highlighted in reporting by The Guardian, has exposed deep fault lines over access, affordability and the future of public service broadcasting.
For nearly 25 years, Freeview has delivered free-to-air television from the BBC, ITV, Channel 4 and Channel 5 to almost every corner of the country. Even now, it remains the UK’s largest TV platform, used in more than 16m homes and on around 10m main household sets. Yet the same broadcasters that built it are now pressing for its closure within eight years.
Their case rests on a structural shift in viewing. Smart TVs, superfast broadband and the Netflix-led streaming boom have pulled audiences online. Advertising economics have followed. By 2034, the number of homes using Freeview as their main TV set is forecast to fall from a peak of almost 12m in 2012 to fewer than 2m, making digital terrestrial television, or DTT, increasingly costly to sustain.
But critics say the rush to switch off risks abandoning those least able, or least willing, to move online.
“I don’t want to be choosing apps and making new accounts,” says Lynette, 80, from Kent. “It is time-consuming and irritating trying to work out where I want to be, to remember the sequence of clicks, with hieroglyphics instead of words. If I make a mistake I have to start again.”
Lynette is among nearly 100,000 people who have signed a “save Freeview” petition launched by campaign group Silver Voices. She fears the government is about to “take [Freeview] away from me and others who either don’t like, can’t afford, or can’t use online versions”.
Official figures underline the fault lines. A report commissioned by the Department for Culture, Media and Sport estimates that by 2035, 1.8m homes will still depend on Freeview. Ofcom’s analysis shows those households are more likely to be disabled, older, living alone, female, and based in the north of England, Wales, Scotland and Northern Ireland.
Freeview is owned by the public service broadcasters through Everyone TV, which also operates Freesat and the newer streaming platform Freely. After two years of review, DCMS is expected to set out its position soon, drawing on three options proposed by Ofcom: a costly upgrade of Freeview’s ageing technology; maintaining a bare-bones service with only core PSB channels; or a full switch-off during the 2030s.
The broadcasters have rallied behind the third option. They argue that 2034 is the logical cut-off, when transmission contracts with network operator Arqiva expire. By then, they say, the cost of broadcasting to a dwindling audience will far outweigh the returns from TV advertising.
Ofcom agrees a crunch point is approaching. In July, the regulator warned of a “tipping point” within the next few years, after which it will no longer be commercially viable for broadcasters to carry the costs of DTT.
Others see risks beyond economics. Questions remain over whether internet TV can reliably deliver emergency broadcasts, such as the daily Covid updates, in the way that universally available DTT can. The UK radio industry has also warned that an internet-only future for TV could push up distribution costs and force some radio stations off air if PSBs no longer share Arqiva’s mast network.
“It is a political hot potato,” says Dennis Reed, founder of Silver Voices, who says he has “dissociated” his organisation from the government’s stakeholder forum, which he believes is “heavily biased” towards streaming.
The Future TV Taskforce, representing the PSBs, counters that moving online could “close the digital divide once and for all”. “We want to be able to plan to ensure that no one is left behind,” a spokesperson says, adding that rising DTT costs could otherwise mean cuts to programme budgets.
The numbers show the scale of the challenge. Of the 1.8m Freeview-dependent homes projected for 2035, around 1.1m are expected to have broadband but not use it for TV. The remaining 700,000 are forecast to lack a broadband connection altogether.
Veterans of the analogue switch-off, completed in 2012 after 76 years, recall similar fears of “TV blackout chaos”. Around 6 per cent of households were labelled “digital refuseniks”, yet a targeted help scheme and a national campaign, fronted by a robot called Digit Al voiced by Matt Lucas, delivered a largely smooth transition.
This time, the BBC is less keen to foot the bill. Tim Davie, the outgoing director general, has said the corporation should not fund a comparable support programme for a Freeview switch-off.
Research for Sky by Oliver & Ohlbaum suggests that with early awareness campaigns and digital inclusion measures, only about 330,000 households would ultimately need hands-on help ahead of a 2034 shutdown.
Meanwhile, viewing habits continue to fragment. Audience body Barb says 7 per cent of UK households no longer own a TV set, choosing to watch on other devices. In December, YouTube overtook the BBC’s combined channels in total UK viewing across TVs, smartphones and tablets, albeit measured at a minimum of three minutes.
That shift may accelerate. YouTube has recently blocked Barb and its partner Kantar from accessing viewing session data, limiting transparency just as online platforms consolidate power.
“When the government chose British Satellite Broadcasting as the ‘winner’ in satellite TV it was Rupert Murdoch’s Sky instead that came out on top,” says a senior TV executive quoted by The Guardian. “There already is such an outsider ready to be the winner in the transition to internet TV; it is YouTube.”
Freeview’s future now hangs on a familiar British dilemma: modernise fast and risk exclusion, or protect universality and pay the price. Either way, the aerial’s days as king of the living room look numbered.
