Viacom puts its might behind six brands to turn itself around

By Jessica Toonkel and Rishika Sadam

(Reuters) - Viacom Inc presented a plan on Thursday to turn around its business, focusing on six of its brands, and the entertainment company reported higher-than-expected quarterly earnings and revenue.

Shares of Viacom were up 5.5 percent at $44.37 in morning trading.

The company is giving top priority to its BET, Comedy Central, MTV, Nickelodeon and Nick Jr channels and its Paramount film studio, it said in its earnings release. Viacom will reorganize other brands to support those six.

"The flagship six is essentially the strongest entertainment pack you can get in the market," new Chief Executive Officer Bob Bakish said in a call to analysts.

By focusing on those brands, being more selective with content it licenses to online streaming services and looking for other ways to partner with distributors, the company expects to improve affiliate revenue.

The company expects U.S. affiliate revenue to rise by a low- to mid-single-digit percentage rate this year, executives said on the call.

This is the first major move by Bakish. The former head of Viacom's international business took over as permanent CEO in December after the Redstone family stopped exploring a merger of the company and CBS.

Sumner Redstone and his family own controlling stakes in Viacom and CBS through privately held movie theater company, National Amusements Inc.

For years, Viacom has contended with falling domestic ad revenues and poor ratings as younger viewers increasingly watch content online, while Paramount has suffered from a lack of box-office hits.

Bakish's efforts also come after a year of distractions for the company as the Redstones battled to maintain control, resulting in the departure of former CEO Philippe Dauman.

While Viacom reported higher-than-expected earnings and revenue for the first quarter ended on Dec. 31, U.S. ad sales fell 3 percent, in line with industry expectations.

The company said it would begin co-branding releases between its Paramount studio and some of its networks. For example, Nickelodeon and Paramount will do four films together.

Viacom will rename its Spike network "The Paramount Network" in 2018.

First-quarter revenue from Viacom's film business increased 24 percent to $758 million from a year earlier. Analysts had expected $678.8 million, according to market research firm FactSet StreetAccount.

The media networks business reported a 1 percent rise in revenue to $2.59 billion. Analysts had expected $2.54 billion, according to FactSet StreetAccount.

However, net income attributable to Viacom fell to $396 million, or $1 per share, from $449 million, or $1.13 per share, a year earlier.

Excluding special items, the company earned $1.04 per share, beating the analysts' average estimate of 84 cents, according to Thomson Reuters I/B/E/S.

Revenue rose 5.4 percent to $3.32 billion. Analysts had expected $3.18 billion.

(Reporting by Jessica Toonkel in New York and Rishika Sadam in Bengaluru; Editing by Lisa Von Ahn)