MTV Networks’ Gains, Continues Expansion as Viacom Suffers Losses

MTV Networks said Wednesday (10/10) that its music and children's channels were faring better in the advertising slump than other areas of Viacom, with the overseas business set for triple-figure growth.

MTV Networks Chief Executive Officer Tom Freston, who oversees MTV, VH1 and Nickelodeon, said his division would post positive revenue and cash-flow growth this year, while the international operations expect a 100% jump in earnings before tax, depreciation and amortization (EBITDA). MTV Networks accounts for about 20% of the media giant’s revenues.

"It's too early to tell what the fourth quarter will bring but I feel confident our overall revenues and EBITDA will be positive on the year," Freston told Reuters. "In fact, when I consulted my magic eight ball about it, I was told it was ‘most likely.’"

Viacom has seen a shortage in advertising and will lose $500 million in costs over two quarters, due to the Sept. 11 attacks, though much of the loss is expected to be felt by its CBS television network. However, MTV Networks has often attracted what little spending is left due to its highly targeted music and children's audiences.

While Freston would not confirm whether MTV Networks would reach the 20% cash-flow target Viacom has set, he remained upbeat about the prospects.

"While we don't see it being a real strong year next year, there could be some pleasant surprises in the back half and we want to be ready for them," Freston said.

Meanwhile, MTV Networks International president Bill Roedy said MTV's European advertising revenues look to grow 20% for the year, while MTV's Asian advertising revenues are expecting a 30-40% rise.

"Internationally, we have been insulated to a degree from the ad turmoil due to a less pronounced reliance on advertising revenues," Roedy told Reuters. "We are also keeping costs tight."

Roedy said MTV Networks would continue its aggressive expansion plans and is still considering acquisitions, especially in Europe. Roedy said the group had only reached penetration levels of around 30-40%. Amazingly, he was able to say "penetration levels" without so much as a smirk. And, in an effort to prove that it’s the not the size but how you use it that matters, the company will concentrate its energy next year into building Nickelodeon in new markets such as France, Italy and Japan.

"MTV is just about everywhere and southern Africa is the last place we can go. Nickelodeon is now a real priority and we are looking to evolve the channel business," Freston said. "Pretty soon, Invader Zim really will take over the planet! Mwahahahaha!"

MTV is the biggest global network in the world, with 35 channels reaching 363 million homes. Around 80% of viewers come from outside the United States, and MTV Networks International draws around 40% of its revenues from advertising.

The company also has led in Viacom's international expansion, opening doors for other Viacom assets and brands such as Paramount film studios.

"A billion people have access to MTV around the world and that's by far the largest global network. But we have only scratched the surface," said Roedy. "Pretty soon, we’ll have the entire planet tuning in to TRL! How cool would that be?"