Viacom Inc. reported a higher-than-expected third-quarter profit today (Nov. 2) as increased advertising sales at its MTV cable networks and the “War of the Worlds” box-office release offset a slump at the television stations group.
Also on Tuesday, Viacom named veteran media consultant Michael Wolf as MTV Networks president and chief operating officer.
Third-quarter results, boosted by double-digit cable and film revenue growth, provided an early glimpse on how Viacom would perform as two companies. It expects to split the faster growing cable and films division from its more mature broadcast and radio operations by the end of 2005.
Frustrated by a stock that’s fallen 15% since the beginning of this year, Viacom aims to appeal to different types of investors with the split.
“Here is an asset that investors have very much given up on,” said Fulcrum Global Partners analyst Richard Greenfield, adding that he saw “tremendous growth in the new Viacom,” which will consist of the cable networks and film studio.
The media conglomerate, whose shares rose 1.5%, posted earnings of $708.5 million, or 45 cents per share, compared with a year-earlier net loss of $487.6 million, or 28 cents per share.
Revenue rose 10% to $5.9 billion, exceeding Wall Street expectations of $5.8 billion. Driving the gain was a 54% jump in Paramount Pictures’ revenue, which benefited from the “War of the Worlds” release and DVD sales.
Viacom booked about $58 million in one-time charges.
Revenue rose 15% at the cable networks, but fell 2% at the TV stations because of lower licensing sales.
Radio station revenue rose 2% from growth in local and national advertising.
Les Moonves, co-chief operating officer of Viacom, defended the broadcasting division’s future, which some analysts have called into question and currently view as a relic as younger viewers migrate to the Internet.
Programming from CBS, which unveiled plans for a 24-hour high speed Internet video service in July, will be made available on as many places and devices as possible, Moonves said, suggesting talks were to provide programming to Apple Computer Inc.’s new iTunes music and video store.
“We are tapping every single new area of revenue potential for our brands from blogging to Apple’s iTunes,” Moonves said.
For the full year, Viacom backed its earlier forecast of mid-single-digit percentage growth in revenue and operating income and a high single-digit rise in earnings per share before special items.
— Reuters
