Viacom's 1st-Qtr Profit Rises 44% on Cable Ad Revenue
New York, April 27 (Bloomberg) -- Viacom Inc., the world's fourth-largest media company, said first-quarter profit from operations increased 44 percent, led by advertising revenue at its cable television networks, including MTV and Nickelodeon.
Viacom's profit rose to $68.4 million, or 8 cents a share, from $47.6 million, or 5 cents, a year earlier. Per-share earnings were expected to be 5 cents a share, the average estimate of analysts polled by First Call Corp. Forecasts ranged from a loss of 4 cents to a profit of 10 cents.
Viacom's revenue rose 9.9 percent to $2.95 billion from $2.69 billion, as higher viewer ratings for cable channels MTV, VH1 and Nickelodeon spurred a 28 percent gain in advertising revenue. The advertising gain and increased revenue at its No. 1- ranked Blockbuster video-rental chain, which Viacom plans to take public, boosted the stock about 70 percent in the past 12 months.
''Ratings at the cable channels continue to rocket,'' said Frederick Moran, an analyst at ING Baring Furman Selz, who has a ''strong buy'' rating on Viacom shares. He predicts the stock could rise to 60 by the year's end.
''Viacom is able to command many more advertising dollars'' than before, as cable continues to takes away more viewers from the broadcast television networks. Broadcast networks traditionally have been able to charge higher advertising rates.
Shares
Viacom shares fell 7/8 to 45 11/16 on concern that Blockbuster's advertising costs, along with losses at its United Paramount Network and about $5.4 billion in debt, will hurt earnings. Also, the New York-based company's film unit didn't make as much profit as it did a year ago, when the hit movie ''Titanic'' was running.
''The entertainment division is down because of 'Titanic' and video is off,'' said Scott Davis, an analyst at Schroder & Co. Another Schroder analyst, David Londoner, rates Viacom ''outperform significantly.''
Cash flow rose 3.1 percent to $474.6 million from $460.2 million. Cash flow, or earnings before interest, taxes, depreciation and amortization, is a key measure of the performance of indebted companies because it focuses on their underlying businesses.
The entertainment division's cash flow fell 6.3 percent to $162.8 million. The Paramount studio's films included ''Payback,'' which has generated about $80 million, ''200 Cigarettes,'' with about $6.8 million, ''Varsity Blues,'' with about $53 million and ''A Simple Plan,'' with about $16 million.
Cash Flow
Cash flow at the networks division, which includes MTV, increased 34 percent to $201.5 million.
Viacom said it's seeking to expand further abroad and on the Internet by capitalizing on the name-recognition of its MTV Networks business, which includes cable channels MTV, Nickelodeon, VH1, TV Land and Nick at Night.
Viacom will soon announce ''interesting developments that will enhance and add great value to our online strategy,'' Chairman and Chief Executive Sumner Redstone said on a conference call with analysts and the media.
Redstone, who declined to elaborate, also reiterated that Viacom will consider a public stock sale of its Internet business at ''the appropriate time.''
Viacom's per-share earnings were adjusted for a 2-for-1 stock split on March 31 and for preferred-dividend payments.
Viacom took a first-quarter charge of $23.5 million, or 3 cents a share, for debt-retirement costs. That cut net income to $44.9 million, or 5 cents.
In the year-ago quarter, Viacom had a loss from discontinued operations of $46.2 million, or 7 cents, from its educational, professional and reference publishing business and from Blockbuster music. The losses cut net income to $1.4 million, or 2 cents.
Apr/27/1999 16:21
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