Spinoff hits Viacom
Takes $1.5 bil writeoff due to Blockbuster
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Without the charge, the conglom showed double-digit growth led by cable and network television, which more than balanced weakness at Infinity Radio, and a release slate at Paramount that included the bomb "Sky Captain and the World of Tomorrow."
Company announced an $8 billion buyback of stock and a 16.7% increase in the quarterly dividend as a way of returning value to shareholders. Topper Sumner Redstone said the company would begin buying back its own stock immediately.
"We intend to be very aggressive," he said. "We do not think there is going to be another time where we are able to buy our stock at these depressed prices."
Company posted a net loss of $487.6 million compared with net earnings of $699.6 million in the same quarter last year. Revenue increased 4% to $5.5 billion from $5.3 billion a year ago.
Without the charge, Viacom reported net earnings of $723 million, a 12% increase.
Viacom's stable of cable nets led the way. The nets, including MTV, VH1, Nickelodeon, Spike, BET and Comedy Central saw operating income increase 13% to $691 million from a year ago, driven by higher affiliate fees and a 33% increase in ancillary income from product licensing.
Viacom's CBS broadcast net, first in total viewers, saw operating income increase 7% to $389 million, driven by ad revenue growth of 4% and stations group revenue up 3% due to increased political sales.
Radio unit weak
Radio continued to limp along, with revenue at Infinity Broadcasting dipping 4% and operating income down 17% due to a combination of weak local advertising and increased investment in ailing stations.
"We have picked out nine radio stations to invest in," co-prexy Les Moonves said, explaining that some of the stations in the Infinity fold had been "starving" for investment. Infinity freed up some cash when it allowed Howard Stern to jump to Sirius Satellite Radio in 2006 in a $500 million deal.
Operating income at Viacom's entertainment unit, which includes Paramount studio, publishing and the theme parks, fell 10% to $100 million, due to weak box office at the film studio. In addition to "Sky Captain" par released "Without a Paddle" and the "Manchurian Candidate" in the quarter. "Sky Captain" was the biggest disappointment, but Par is hoping another Jude Law film, "Alfie," boosts results in the fourth quarter.
Co-prexy Tom Freston said turnaround initiatives at Paramount include more DVD releases, a younger-skewing slate, and using unsold ad inventory on the cable and broadcast nets to cut promotion costs for films.
Redstone said Viacom would continue to dispose of smaller, non-strategic businesses, while using its powerful balance sheet, with $2.5 billion in cash, to pursue acquisitions.
Company is exploring the sale of Canadian 856-screen exhib chain Famous Players and said it closed the sale of its 50% stake in United Cinemas International, a European exhib chain it owned with Vivendi Universal to Terra Firma Capital Partners.
