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VIACOM Q1 EARNINGS LAG
AS COMPANY MULLS SPLIT

Cable, Outdoor Are Up, but TV, Radio
Weigh on Results
Viacom, Inc. reported a 5.3% gain in revenue for the first quarter, to $5.58 billion from $5.3 billion a year ago, led by a 19% gain in revenue at its cable networks, which include MTV Networks and Showtime, but logged an 18% drop in net income, to $585 million ($.36 cents per share) from $710.5 million ($.41 cents per share) a year ago, due mostly to a drop in broadcast TV revenue.

Revenue at Viacom’s television unit, which includes CBS and UPN, dropped 5% for the quarter, while its radio division reported a 5% drop in operating income despite a 2% gain in revenue. The company attributed the decline to higher programming, promotion and employee costs.

At Viacom’s high-flying cable unit, revenue increased to $1.7 billion from $1.4 billion, driven by 27% growth in ad revenue, led by gains at MTV International, Nickelodeon, Comedy Central, MTV, VH1 and BET. Operating income increased 20% to $623 million from $520 million.

Outdoor (billboard) revenue increased 6% to $429 million from $403 million. Operating income increased 20% to $17 million from $14 million.

Going forward, Viacom says it is on track to deliver mid single-digit growth in revenue and operating income, and high single-digit growth in earnings per share for the full year.

Meanwhile, Viacom continues to consider splitting its assets into two separately traded companies: One centered around its cable business (MTV Networks), the other around broadcast TV (CBS). Viacom Chairman/CEO Sumner Redstone said in a statement, ““We continue to explore the separation of Viacom into two new and focused entities that could better position our businesses for continued growth and enhance shareholder return. We are diligently working to determine and resolve all the issues raised by the proposed transaction and expect to complete the analysis in the second quarter.”
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