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Viacom Profit Up As Advertising Improves

ANDREW VANACORE   04/29/10 02:50 PM ET   AP

Sumner Redstone

NEW YORK — Viacom Inc.'s cable TV channels won more viewers and took in more advertising revenue in the first quarter, boosting the company's net profit 38 percent.

The New York media conglomerate, controlled by billionaire Sumner Redstone, also benefited from cost cutting. Even so, the results released Thursday offer another sign that businesses are putting more money into winning consumers' attention again. Media of all kinds suffered last year as companies slashed ad spending.

Viacom, whose cable channels include BET, MTV, Comedy Central and Nickelodeon, said Thursday that domestic ad sales grew 1 percent from the same quarter a year ago. Worldwide advertising rose 3 percent.

The ad figures came a day after Comcast Corp. reported a jump in ad revenue at its cable channels, including E! Entertainment Television, Style Network and the Golf Channel.

The improvement could strengthen the hand of media companies during this spring's "upfronts," an annual ritual in the TV business when advertisers bid on commercial time for the rest of the year. Last year's upfronts during the recession set a bleak tone for the rest of 2009. Barclays Capital is projecting cable revenue generated by the upfronts will be 15 percent to 20 percent higher in 2010 than it was last year.

"It will be a happier time for sellers of advertising this upfront season than it was last year," Viacom CEO Philippe Dauman told analysts in a conference call Thursday.

He also hinted that Viacom may start paying a dividend or put money aside for buying back shares. He said the company's board will consider ways to return cash to shareholders over the next few months.

Viacom's common class B shares rose 78 cents, or 2.2 percent, to $36.28 in afternoon trading.

Viacom said its first-quarter profit came to $245 million, or 40 cents per share. That compares with $177 million, or 29 cents per share, in the same quarter a year ago.

On average, analysts expected 38 cents per share, according to a Thomson Reuters survey.

Revenue slipped 4 percent to $2.8 billion, while analysts had predicted $2.9 billion.

The strong cable TV results helped offset declining revenue at Paramount Pictures – although the film studio narrowed its losses by slashing costs and focusing on a smaller slate of films. The studio's revenue dropped 18 percent to $886 million, while its operating loss shrunk to $86 million from $123 million.

The segment that includes Viacom's cable channels as well the "Rock Band" video game franchise grew revenue 4 percent to $1.9 billion and operating income 9 percent to $684 million. Along with better ad revenue, Viacom brought in more money from the fees it charges cable TV providers to carry its channels.

The company said its flagship MTV channel, which has been struggling in recent years, saw ratings climb 10 percent over last year's first quarter.


Filed by Danny Shea  |