Viacom does well in Q3, but there is still work to be done

That's a guess, of course, since I obviously have no way of knowing what would have actually happened had circumstances been different. But when you take a look at the profit recorded in the studio division, you have to believe investors were impressed today. Last year at this time, Viacom's movie segment lost $19 million. This year, positive income of $69 million was generated, driven by the Transformers and G.I. Joe films from the summer. I'm sure management wants to send out a big thanks to Hasbro (NYSE: HAS) for the help. And the media division, which houses MTV Networks, saw a 2% increase in profit. I know, big deal, but that's better than the decline in profit seen over the nine-month period.

Whether or not the stock would have been up or down today if X or Y had been different doesn't matter, though. What does matter is this: Viacom is kidding itself if it believes, as Executive Chairman Sumner M. Redstone trumpeted, that the business is "well positioned to capitalize on future opportunities." Hey, there are fundamental problems which must be dealt with. MTV Networks still needs help, as this item mentions, and the home video industry isn't in the best of states as the previously cited Bloomberg article highlighted. In terms of the media division, remember that it includes the Rock Band video game, which is distributed by Electronic Arts (NASDAQ: ERTS). Viacom released the Beatles version of the product in September. So, although the news release didn't break out specific numbers, I'd have to think that, without the benefit of the title, the media division wouldn't have done as well as a 2% gain in profit. This hammers home, to me at least, the urgency for Viacom to improve its cable division's growth trend.

Of course, there is an advertising malaise going around, so I will concede the bad environment to management. Still, Viacom should not look at this quarter and believe its status quo is healthy and in the clear. Programming costs remain higher than they should be, home video has to be addressed, digital distribution on the web is still experiencing a monetization deficit, the trend in music video games is arguably no longer on the side of publishers, Disney (NYSE: DIS) is perceived to be cooler than Nickelodeon by all the trendsetting tweens, and a studio's slate of films can cool down as fast as it heats up.

Yep, I'd say there's work to be done. And perhaps I just answered the question as to why Viacom's stock isn't rocking and rolling this trading session.

Disclosure: I own Disney, GE; positions can change without notice.