Viacom swings to profit in third quarter
Monday, October 24th 2005, 10:35 am
By: News On 6
NEW YORK (AP) _ Viacom Inc., the media conglomerate that owns MTV, CBS and the Paramount movie studio, swung to a profit of $708.5 million in the third quarter, bouncing back from a loss in the year-ago period when results were hit by a charge for the Blockbuster Inc. video rental business.
Viacom said Tuesday its profit in the three months ended Sept. 30 was equivalent to 45 cents per share, in line with the estimates of analysts surveyed by Thomson Financial. In the same period a year ago, Viacom posted a loss of $487.6 million, or 28 cents per share, due to a $1.5 billion charge related to Blockbuster, which has since been split off into a separate company.
Revenues rose 10 percent to $5.94 billion from $5.38 billion in the same three-month period a year ago.
Viacom is planning to divide itself into two companies by the end of the year, one anchored by the CBS television network, and another built around MTV and Viacom's other cable channels including VH1, Nickelodeon and BET.
In anticipation of the split, Viacom realigned some of its businesses to reflect the structure of the two new companies. In one such move, Viacom folded the Showtime cable channel into its CBS television division.
Earnings from broadcast television were a soft spot for Viacom in the quarter. Operating income there dropped 19 percent on a 2 percent decline in revenues due mainly to a 25 percent dropoff in television licensing revenues compared with the same period a year ago, when CBS's hit series ``CSI'' became available for syndication.
Earnings from radio _ long a trouble spot for Viacom _ edged up just 1 percent despite a 2 percent increase in revenues as expenses increased 3 percent due to higher programming and personnel expenses.
Viacom's radio business, Infinity Broadcasting, is about to lose its star shock jock Howard Stern to Sirius Satellite Radio Inc. in January. Infinity announced replacements for Stern last week, including former Van Halen frontman David Lee Roth and late night comedian Adam Carolla.
Profits from movies and entertainment, an extremely volatile, hit-driven business, surged to $109.7 million from $5.1 million a year ago on a 54 percent jump in revenues. Viacom did not break out specific details behind the surge, but noted that its box office take benefited from ``War of the Worlds,'' which has brought in $234 million so far in U.S. theaters, and home entertainment business got a lift from DVD sales of ``The Longest Yard'' and ``Sahara.''
Cable networks, a stalwart of profitability for Viacom, posted an 11 percent gain in income on a 15 percent rise in revenues, as advertising revenues rose 17 percent. Viacom said profitability at the cable networks was offset by higher investments in new programming and new global business ventures.
Viacom also announced Tuesday that it has named Michael J. Wolf, the head of the media practice at the consulting firm McKinsey & Co., as president and chief operating officer of MTV Networks, a new position. Wolf will report to Judy McGrath, the chairman and CEO of MTV Networks.