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Viacom profit up 27 pct on cable ad sales
2006-08-09
Viacom Inc. on Wednesday beat Wall Street estimates with a 27 percent rise in second-quarter profit, as strong advertising sales at MTV Networks offered one of the first signs that the company is growing since its January split from CBS. Viacom's (NYSE:VIA)(NYSE:VIAB) shares rose as much as 4 percent in after-hours trade as investors who had previously sold off the stock on fears of a slowdown in cable advertising growth were appeased by the results. "People worried that Viacom's cable networks were mature, no-growth businesses were wrong," Pali Capital analyst Richard Greenfield said. Viacom split from its broadcast television and radio group CBS Corp. (NYSE:CBSA)(NYSE:CBS) as part of a strategy to target investors interested in owning a high-profit growth company. But its shares have fallen about 19 percent since the start of the year on concerns that a promised double-digit profit growth driven by MTV Networks, one of the top brands in the fickle but influential youth market, could be harder to reach. Viacom's second-quarter results appeared to fend off those worries for now. The New York-based media conglomerate, which also owns Paramount film studios, said profit from continuing operations of $416 million, or 58 cents per share, rose from $328.5 million, or 44 cents per share, in the year-ago period. Revenue rose 24 percent to $2.85 billion, topping the average Wall Street forecast of $2.53 billion, according to Reuters Estimates. Excluding a 10 cents per share gain from tax reserves, Viacom earned 48 cents per share, beating the average forecast of 44 cents per share from Reuters Estimates. DIGITAL PROPERTIES Viacom said earlier in the day it would buy online video and games company Atom Entertainment Inc. for $200 million as it seeks to build its Internet business. Digital properties "is of primary importance and it's integral to everything we do," Viacom chief executive Tom Freston said in a conference call with analysts. Although small, digital revenue rose 58 percent to $51 million in the quarter. Digital advertising revenue, which comprise 68 percent of total digital revenue, rose 75 percent. Looking ahead, Viacom reaffirmed its 2006 outlook for double-digit operating income and revenue growth. It expects annual diluted earnings per share from continuing operations of about $1.95 to $2.00, excluding tax benefits. Overall second quarter operating profit grew 14 percent, led primarily by cable ad sales from MTV, which helped push up cable network revenue by 8 percent to $1.75 billion. Revenue from movies jumped 59 percent to $1.12 billion, boosted primarily by the purchase of DreamWorks. Viacom's Class A shares rose $1.29 to $35.04 on the report, after closing at $33.75 on the New York Stock Exchange. As high hopes for a major share price boost from the CBS split have not yet panned out, some Wall Street analysts are wondering if chairman Sumner Redstone, who very publicly declared the end of the conglomerate era last year, should privatize the company or buy back shares more aggressively. "For the time being, we like the company exactly as it is," Redstone told analysts, after being asked whether he considered the alternative. "We want to keep it the way it is. It has a great future."
Freston's wild career takes another surprise turn (2006-09-05)Freston out, Dauman in as Viacom's CEO (2006-09-05)Viacom profit up 27 pct on cable ad sales (2006-08-09)Google to distribute MTV clips with ads (2006-08-07)Paramount abandons DreamWorks bid (2005-10-21)
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