Viacom 3rd-Quarter Earnings Up 9 Percent

By | October 24, 2003 at 12:00 AM

Viacom Inc., the media conglomerate that owns CBS and MTV, reported a 9 percent increase in third-quarter earnings Thursday thanks partly to higher advertising revenues.

Viacom earned $700 million in the three months ending in September, up from $640 million in the same period a year ago. Per-share earnings were 40 cents, beating Wall Street’s estimates by two cents, as reported by Thomson First Call. The year-ago earnings were equivalent to 36 cents per share.

Revenue rose 5 percent to $6.60 billion from $6.31 billion a year ago, driven by an 8 percent increase in overall advertising revenues, to $2.88 billion.

Viacom president Mel Karmazin said the company was seeing “positive momentum” in its national advertising businesses, including CBS, MTV and the BET cable channel. He said the company was optimistic about prospects for advertising next year given the primary and presidential elections and the Super Bowl broadcast on CBS.

CEO Sumner Redstone said the gains came despite “slower than expected” growth in local advertising markets, which were not as robust as gains in national advertising.

Most of Viacom’s businesses performed well in the quarter, except for outdoor advertising and entertainment, which includes the Paramount movie studio and related businesses.

Cable networks, a perennially strong performer that includes MTV and VH1, reported 20 percent higher earnings, and the television group, made up of CBS, UPN, a syndication business and an array of local TV stations, had 19 percent growth in earnings.

Earnings at Viacom’s outdoor advertising business slumped 29 percent on lower revenues from advertising on U.S. transit outlets and billboards in Mexico. The entertainment division’s income fell 24 percent, which the company said was mainly due to higher advertising costs for movies.

For the first nine months of the year, Viacom earned $1.8 billion compared with $73 million in the comparable year-ago period, when the company recorded a $1.48 billion accounting charge. Without the charge, nine-month earnings were up 17 percent, and per-share earnings were $1.03 versus 87 cents.

Nine-month revenue rose 7 percent to $19.07 billion from $17.83 billion.

The earnings included a $40 million gain in the third quarter from the settlement of a business disruption claim in 2001, as well as the full share of results from Comedy Central. Viacom acquired the 50 percent stake in Comedy Central that it didn’t already own in May of this year.

The company’s B shares were up 2 cents to close at $38.75 on the New York Stock Exchange.

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