Paramount DVD sales jump 30% on Iron Man

Blu-ray record-setter can't offset studio's theatrical losses

By Danny King -- Video Business, 11/3/2008

NOV. 3 | Viacom said third-quarter home entertainment sales from its Paramount unit increased on its late-quarter release of Iron Man, defying an overall drop in U.S. DVD spending. However, the DVD sales increase and strong performance from the company’s Rock Band videogame failed to offset the parent company’s profit decline, due largely to a theatrical slate that was weaker than a year ago.

Paramount’s home entertainment revenue rose 30% from a year earlier to $593 million, marking a bright spot within a filmed entertainment division that took a loss as current theatrical releases failed to match last year’s success of Transformers, Viacom chief financial officer Tom Dooley said on a conference call with analysts today.

Results for Viacom contrasted with overall U.S. DVD spending, which fell 2.4% to $14.25 billion, according to data compiled by Video Business and Rentrak. Despite Paramount’s Iron Man being released Sept. 30, presales for the title, whose 7.2 million unit sales during its first week made it the top U.S. debut of the year, led the DVD sales surge.

“The Blu-ray Iron Man DVD was the No. 1 DVD of the year and the best-selling Blu-ray disc of all time,” Viacom CEO Philippe Dauman said on the call.

Additionally, Viacom’s Rock Band videogame franchise boosted the media network unit’s ancillary sales by 36% from a year earlier, and the company is expecting further profit from its agreement last week for its MTV Networks division to develop a Beatles-based videogame with Electronic Arts.

Still, games and DVD sales didn’t stop Viacom’s filmed entertainment division from dragging down the parent company’s net income, which fell 37% to $401 million, despite a 4% increase in revenue. Though Paramount’s third-quarter sales were little changed at $1.31 billion, the division took a $19 million operating loss, compared with a $72 million operating profit a year earlier, as this year’s theatrical releases including American Teen and Tropic Thunder failed to keep pace with the July 2007 release of Transformers, according to Dooley. That film grossed $708 million worldwide during its theater run last year.

“Viacom had to adjust to the realities of a serious economic downturn,” Dauman said.

Additionally, Viacom chairman Sumner Redstone, whose holding company National Amusements recently sold about $230 million of CBS and Viacom stock, said on the call that the company “does not intend to sell one more share of stock in Viacom and CBS.”