MTV owner Viacom reports 33 pct 1Q profit rise
Friday, May 2, 2008; 5:09 PM
NEW YORK -- Strong sales of the video game "Rock Band" helped lift first-quarter earnings 33 percent at the entertainment company Viacom Inc., a major cable network operator which owns MTV and Nickelodeon.
Viacom, which is controlled by billionaire Sumner Redstone, said Friday it earned $270 million, or 42 cents per share, in the first three months of the year, up from $203 million, or 29 cents per share, in the same period a year ago.
Excluding an investment write-down, earnings were 44 cents a share, ahead of the 41 cents per share predicted by analysts polled by Thomson Financial. The year-ago earnings were equivalent to 34 cents excluding a restructuring charge.
Revenues rose 15 percent to $3.12 billion from $2.72 billion.
Higher sales of "Rock Band" and a 22 percent gain in home video revenues outweighed a 7 percent decline at the box office. The home video business got a $29 million boost from the early termination of an exclusivity deal for the now-defunct HD-DVD format.
In April Viacom joined other Hollywood studios in a venture to create a new pay cable channel and video-on-demand service that would compete with Time Warner Inc.'s HBO and CBS Corp.'s Showtime.
Speaking on a conference call with investors, CEO Philippe Dauman called the initial expressions of interest in the channel "very encouraging."
Chief Financial Officer Tom Dooley said the company's total investment over the life of the venture was likely to be less than $100 million.
Advertising revenues rose 8 percent, despite concerns about the slowing economy weighing down spending, on gains at the cable networks Nickelodeon, Comedy Central and TV Land.
Profits from media networks rose 15 percent, or 6 percent excluding the effect of a restructuring charge a year ago.
The loss at Viacom's movie business, which includes Paramount and DreamWorks SKG, narrowed to $63 million from $108 million, as a 12 percent gain in revenues was offset by 7 percent higher expenses, largely from recognizing movie production costs.
Viacom split off from former sister company CBS Corp. two years ago, but both companies are still controlled by Redstone.
The company confirmed its long-term forecast of low double-digit annual growth in earnings per share from 2008 through 2010.
Viacom's Class B shares fell 49 cents, or 1.2 percent, to close at $39.25 Friday.