uploads///VIAB_Affiliate Revs Growth_Q

Viacom’s Affiliate Revenue May Gain from Multiyear Renewal Deals

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Dec. 4 2020, Updated 10:53 a.m. ET

Affiliate revenue growth in fiscal 4Q17

Viacom’s (VIAB) affiliate revenue business, part of its media networks segment, fell 1% YoY (year-over-year) to $1.2 billion in fiscal 4Q17. A loss of video subscribers resulted in this fall in revenue.

Despite the rate hike, domestic affiliate revenue fell 3% YoY to $948 million due to increased subscriber losses and softness in SVOD (subscription video on demand) business. On the other hand, revenue from Viacom’s international business rose 12% YoY to $200 million.

Affiliate revenue, which makes up nearly 36% of the company’s total revenue, has continued to fall at a CAGR (compound annual growth rate) of 0.3% in the last five quarters. In the graph above, we can see affiliate revenue over the period.

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Plans to offset affiliate revenue headwinds

In fiscal 2017, however, affiliate revenue improved 1.8% on an annualized basis driven by a 1% YoY rise in domestic affiliate revenue. Higher fees charged for the renewal of multiyear deals with several major distributors, such as Altice USA and Charter Communications (CHTR), coupled with higher SVOD sales have helped drive revenue for the full year.

International affiliate revenue also reported a rise of 6% YoY in fiscal 2017 driven by the rising popularity of channels and content across Europe and India.

Despite the loss of domestic video subscribers, the company continues to team-up with video streaming operators such as Netflix (NFLX) and Amazon Prime Video (AMZN) to deliver its products on multiple platforms. Such a move could help the company to mitigate falls in its affiliate revenue arising out of subscriber losses from major pay-TV operators such as Comcast (CMCSA) and DISH Network.

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