FILE – In this Jan. 19, 2010 file photo, the logo above the entrance to Viacom’s headquarters is shown, in New York. Viacom reports its earnings tumbled in the third quarter Thursday, Nov. 11, 2010, because of results from a division that the media company led by Sumner Redstone plans to sell.(AP Photo/Mark Lennihan, file)
NEW YORK (AP) — For Viacom Inc., Thursday was the day the music died.
Or at least the catchy pop tunes emanating from its “Rock Band” video games.
Viacom said the money-losing business unit that developed “Rock Band” is now on the auction block. The media conglomerate acknowledged that it never quite figured out how to run a successful video game company — even one that drew the kind of cultural buzz that it did when “The Beatles: Rock Band” came out last year.
Investors approved, pushing Viacom’s stock up 4 percent as the broader market fell. The company released quarterly results Thursday that otherwise topped Wall Street expectations.
The “Rock Band” business, called Harmonix, has dragged on the company’s earnings for the past several quarters as people continue to avoid big shopping sprees.
Music games such as “Rock Band” have struggled in particular because of the pricey accessories — plastic guitars, drums and the like — required to play them. You can buy a $60 copy of “Rock Band 3” for the Xbox at Best Buy, but the instruments used to play along with the game can run you hundreds of dollars extra.
“Harmonix has and will continue to create terrific video games,” Viacom CEO Philippe Dauman said. “But for us, it is about focus. The console games business requires an expertise and scale that we don’t have.”
Dauman said Viacom is in talks with several potential buyers. He did not say when it plans to close a deal or how much it hopes to get for the company.
Viacom’s other media properties continued to grow in the most recent quarter, which ran from July through September.
The New York-based company, which is controlled by billionaire Sumner Redstone, said its net income fell 59 percent to $189 million, or 31 cents per share, because of $260 million in write-offs on the value of Harmonix. That’s down from $463 million, or 76 cents per share, a year ago.
Excluding those one-time charges and other items, Viacom’s adjusted earnings rose to 75 cents from 71 cents per share. That’s 5 cents better than analysts expected, according to a survey by Thomson Reuters.
Revenue climbed 5 percent to $3.3 billion from $3.17 billion, matching the average Wall Street forecast.
Viacom’s cable channels took in more advertising revenue as ratings improved, led by the success of “Jersey Shore.” The reality show has helped revive the company’s once-flagging MTV. Viacom says it is now the channel’s most popular show ever, with the size of its audience up 28 percent over the same quarter last year.
The ratings boost has helped Viacom restore advertising revenue after last year’s slump. Worldwide ad revenue in the third quarter climbed 7 percent from last year, compared with 4 percent growth in the second quarter and 3 percent in the first.
That trend has shown up across the media industry as businesses sink more money into advertising budgets coming out of the recession. The upswing helped boost recent results from News Corp. and Time Warner Inc. as well.
On a conference call with analysts Thursday, Viacom’s CEO said, “We believe this momentum will continue.”
The company’s cable division, which also includes BET, Comedy Central and Nickelodeon, saw revenue increase 8 percent to $2.1 billion, with operating profit up 9 percent to $873 million.
The “Rock Band” unit, which is part of MTV, booked a loss of about $65 million before interest, taxes, depreciation and amortization, a gauge often referred to as EBITDA. The company did not provide a revenue figure or a comparison earnings figure a year ago.
The company’s Paramount Pictures film studio saw a modest increase in revenue, though its profit slipped because of fewer releases. The studio couldn’t match the popularity of last year’s “Transformers: Revenge of the Fallen.”
Film revenue rose 1 percent to $1.2 billion, while operating profit dropped 29 percent to $52 million.
The latest results cap Viacom’s fiscal 2010. The company shifted its reporting calendar this year by a quarter, so its year now runs through September.
For the full nine months of the fiscal year, Viacom’s net income fell 7 percent to $854 million, or $1.40 per share, from $917 million, or $1.51 per share, in the same period of 2009. Excluding discontinued operations and other items, earnings climbed to $1.88 per share from $1.57.
Full-year revenue climbed 1 percent to $9.3 billion from $9.2 billion.
Viacom shares climbed $1.54, or 4 percent, to $39.64 in midday trading Thursday.