He pointed out that profit was driven by the blockbuster movie "Transformers," a co-production with DreamWorks SKG during the third quarter of 2007. However, in the just-concluded quarter, Paramount relied on lower-grossing films such as "Tropic Thunder" and "Eagle Eye."
To save money on marketing costs, Paramount plans to cut back the number of movies it releases each year to no more than 20. And, Dauman said, the exit of DreamWorks would save the studio $50 million a year in overhead costs.
Still, analyst Laura Martin with Media Metrics said Viacom managers glossed over potential downsides from the parting of ways with Steven Spielberg's DreamWorks. The filmmaker is launching a studio with backing from India's Reliance ADA Group and a new distribution deal with rival Universal Pictures.
"That could hurt their talent acquisition ability, and it could potentially hurt them on the revenue side," she said. "We continue to look for a turnaround at the Paramount film studio, but it does not materialize."
Revenue for the studio division, which includes home entertainment and fees from premium cable channels for its movies, was essentially flat at $1.3 billion.
The bulk of Viacom's operating income comes from its collection of TV cable channels. But with advertisers trimming spending and ratings down at marquee channels MTV, VH1 and BET, Viacom's media networks also experienced a bumpy third quarter. Dauman said the company planned to spend more to develop original programming to increase ratings.
Revenue for the networks came in at $2.1 billion, an increase of 6% from the year-ago period. Operating income was $761 million, or 4% lower than in 2007.
Shares closed regular trading at $19.99. Viacom reported its earnings after the markets closed.
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meg.james@latimes.com
