Viacom Profit Down Despite Solid Revenu

The media company Viacom posted better-than-expected revenue for the second quarter yesterday as advertising income rose, but earnings fell slightly because of a tax gain in the period a year ago.

Revenue rose 13 percent, to $3.2 billion, from $3.07 billion in the second quarter last year, beating analysts’ expectations. Earnings fell 4 percent, to $434 million, from $437.3 million, but rose to 63 cents a share, compared with 61 cents a share in the year-ago quarter, when more shares were outstanding.

Excluding special items in both periods, earnings were 54 cents, up from 48 cents a year ago. Analysts had expected earnings of 50 cents a share.

Shares of Viacom, dominated by its cable network unit, which includes MTV, Nickelodeon, Comedy Central and other networks, rose 63 cents, to close at $38.41 a share.

Frederick W. Moran, a media analyst at the Stanford Group, a brokerage firm, said that the revenue and earnings came in better than expected because of what he called “decent” advertising revenue at the company’s main cable network business, despite ratings pressure at MTV. He also cited strong box-office success at Viacom’s film studio, Paramount Pictures.

The other positive news was “the fact the Viacom management said advertising sales are improving in the second half with double-digit price increases,” Mr. Moran said.

At Viacom, the film business has been particularly impressive. “The movie business is the best part right now, although it is small,” Michael G. Nathanson, an analyst at Sanford C. Bernstein & Company, said, referring to Paramount Pictures. “They have had a great year, thanks in part to the DreamWorks relationship which produced ‘Transformers.’ ‘Blades of Glory’ and ‘Norbit.’ ”

Revenue at the film entertainment unit rose 20 percent, to $1.3 billion, and accounted for 40 percent of the company’s total revenue. Profit at the unit rose $17 million, to $21.4 million. Still, operating income from the unit accounted for just 3 percent of the company’s total operating income of $701 million.

Meanwhile, revenue at the media network unit jumped 10 percent, to $1.92 billion, and worldwide advertising revenue rose 6 percent, to $1.15 billion. Affiliate fees rose 15 percent, to $577 million.

Viacom’s chief executive, Philippe P. Dauman, said that its networks made “substantial investments in original programming.” Some analysts were optimistic yesterday that the investment would pay off, particularly for MTV.

“We think that Wall Street tends to be a bit too myopic on ratings and their relationship to revenues,” said Mr. Nathanson, the Bernstein analyst. “Viacom has a window of opportunity to improve ratings and they are launching a raft of new shows in the next quarter.”

Viacom also said that it had benefited from the creation in the second quarter of several narrowly focused Web sites that had helped attract an average of 85 million unique visitors a month to the company’s online sites, a 68 percent increase over last year’s quarter.

In a conference call with analysts yesterday, Viacom’s chairman, Sumner M. Redstone, made no mention of the widely reported friction with his daughter, Shari Redstone. Ms. Redstone is vice chairwoman of both Viacom and CBS.

source:www.nytimes.com