One on One With Tuna Amobi, Sr. Media & Entertainment Analyst at Standard & Poor's
Thursday, November 09, 2006
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SUSIE GHARIB: Media giant Viacom reported better than expected earnings for its third quarter, $0.50 a share. Analysts were looking for $0.48. Still, that's down more than 10 percent from Viacom's year-ago profits of $0.60 a share. Disappointing box office results from its Paramount films offset higher ad sales at the MTV networks cable service. The company also announced its CFO Michael Dolan is leaving at the end of the year and Chief Administrative Officer Thomas Dooley will take his place. Joining us now with more analysis on today's numbers from Disney and Viacom, Tuna Amobi, senior media and entertainment analystc. Hi, Tuna.
TUNA AMOBI, SR. MEDIA & ENTERTAINMENT ANALYST, STANDARD & POOR'S: Thanks for having me.
GHARIB: Well, those are pretty strong numbers from Disney today. Do you think that the company can keep up the momentum throughout its first fiscal year?
AMOBI: I think clearly this robust result sets them up for a very strong fiscal year. If you look at the underlying trends, the theme parks or the film entertainment or the media networks, I think the story is across-the-board strength. Clearly there's some underlying momentum going. I think the outlook that they have for double digit growth at least through the next fiscal year seems pretty much intact.
GHARIB: Does Disney have any movies or from whether its Disney line or Pixar that are in the pipeline that could turn out to be real blockbusters for the new year?
AMOBI: Sure, well, if you look at the slate, I think there is a number of very key titles coming up. First of all, "Pirates of the Caribbean," DVD sales I think should ship very strong for the holiday season. If you look ahead to next summer, there's a number of key titles coming up on the Pixar as well as the Walt Disney picture side. Overall, I think the film division should continue to ride, you know, this solid results that is generated which should enable the company to not only reap the benefits in film, but also the cross platform synergies, so whether it is "Ratatouille" from Pixar or "Day with the Robinsons,: as well as other titles that we really have high hopes for.
GHARIB: Taking a look at Viacom, Viacom's Chairman Sumner Redstone said today that the company's on track to deliver good results for the rest of this year and that is despite problems at the Paramount studios and this big management overhaul that they have had. Do you buy into that?
AMOBI: Well, I think Viacom we still have concerns with the pace of the restructuring at the Paramount studio. We also have some concerns with the advertising growth at MTV networks. But overall I think the new management team, it seems like they are staying the course. I would venture to guess that their honeymoon period with the Street is almost over. So I think the pressure is going to be on them to deliver consistent results. I think no one is more upset than stock price than Sumner Redstone and perhaps rightly so, so investors will keep a keen focus on that.
GHARIB: Well, speaking of the stock, Disney stock has been on the rise. Viacom's has been struggling. What is your view on Disney and Viacom?
AMOBI: Well, I think Disney clearly demonstrated that there is the underlying momentum in the core businesses which is why we are recommending the stock. Over the next 12 months we believe their core catalyst is going to drive the stock up, perhaps you know higher than in 35 which I think could present some resistance. If you look at Viacom, the story is somewhat mixed there. Ad sales are somewhat tentative in the U.S. and internationally. Affiliate fees seem to have somewhat maxed out. I think MTV has yet to demonstrate that it can be a very significant player in this digital space, particularly with a kind of young demographics that it has. So overall I would maintain a neutral stance on Viacom.
GHARIB: Just in terms of disclosure, do you own either one of these stocks?
AMOBI: I neither own nor do I have any affiliation with Disney nor Viacom.
GHARIB: All right. Thanks a lot, Tuna.
AMOBI: Thanks for having me.
GHARIB: We have been speaking with Tuna Amobi, senior media and entertainment analyst at Standard & Poor's.
