Viacom Inc. managed to beat earnings estimates and grow its Paramount studio profits in the quarter ended Sept. 30, though the company saw a sharp decline in theatrical performance, driven by some big flops.
For the calendar year 2019 to date, films distributed by Paramount saw net losses of $213.6 million, according to Kagan, a media market research group within S&P Global Market Intelligence. Only three of the seven releases that have exited theaters during the year landed in the black. Of those, "Rocketman" saw the most profits, at $47.1 million. Its October release "Gemini Man" was a big miss, losing $135.3 million, and the sixth installment in the Terminator franchise, "Dark Fate," could lose over $100 million, according to Variety. The theatrical film studio saw an average $30.5 million loss per film in 2019, according to Kagan, excluding "Dark Fate."
A 2017 restructuring promised a more targeted theatrical strategy, and executives projected movies like "Gemini Man" would make the film studio profitable in 2019. In calendar 2017, the movie studio saw net losses mount to $454.7 million, or an average of $37.9 million per film, according to Kagan. But the company's box office business saw profitability in 2018, up to an average of $33.0 million per title, led by "Mission: Impossible – Fallout" and horror breakout "A Quiet Place."
Executives on a Nov. 14 earnings call promised a more successful slate in its 2020 fiscal year, led by a sequel to "A Quiet Place," a return to the "Top Gun" franchise and movies based on the SpongeBob SquarePants and Sonic the Hedgehog intellectual property. The company will boost its film slate to 17 films in the 2020 fiscal year from 11 in the 2019 fiscal year.
Adjusted operating income at the Paramount filmed entertainment unit was $54 million in Viacom's fourth quarter ended Sept. 30, up 42% year over year, despite a 14% drop in revenue. For the year ended Sept. 30, Paramount revenue was up 1% to $3.08 billion and adjusted operating income was $78 million. However, with a 72.1% quarterly decline in theatrical revenues and the big losses on films during the quarter, executives cited the theatrical film business as a significant drag on Paramount results.