Viacom profit up on cable, movies

The main gate to Paramount Pictures Studios, a division of Viacom, Inc. is pictured in Los Angeles, California July 29, 2008.

NEW YORK (Reuters) - Viacom Inc's quarterly profit beat expectations on higher cable advertising sales, the successful "Jersey Shore" show on MTV, and the hit film "Rango."

Shares in Viacom rose about 4 percent in early trading as investors also welcomed management's decision to propose a dividend raise to its board and accelerate its share buyback program.

The company also sees domestic ad sales rising sequentially in the current quarter and expects to generate higher operating cash flow in the second half of the year.

Viacom, whose cable networks include MTV, BET and Nickelodeon, benefited from higher ratings at its top networks particularly with its highest ever rated TV show, 'Jersey Shore' which has become something of a cultural phenomenon in the U.S. and is set to launch spin-off series.

Cable revenue rose by 11 percent to $2.08 billion, helped by a 12 percent increase in global advertising sales while U.S. ad sales rose 11 percent.

Its Paramount film studio revenue jumped 38 percent to $1.23 billion, driven by strong carry-over performance from Oscar-nominated movies "True Grit" and "The Fighter" from the previous quarter alongside newer releases including "Rango." DVD sales saw a big boost as Paramount significantly increased the number of releases compared with a year ago.

"The media networks were a bit lighter than we expected but the movies were a real surprise for us and the Street," said David Joyce, analyst at Miller Tabak.

Net profit from continuing operations rose to $376 million, or 63 cents per share, compared with $255 million, or 42 cents per share, a year earlier.

Excluding items, earnings from continuing operations were 72 cents. Analysts were on average expecting profit to come in at 62 cents according to Thomson Reuters I/B/E/S.

Revenue rose 20 percent to $3.27 billion.

The company accelerated its stock buyback to $500 million during the quarter and said it's on track to buy back $700 million of stock in current quarter.

Viacom Chief Executive Philippe Dauman said the management team will propose an increase in its regular dividend to its board for payment on July 1.

Shares in Viacom were up $1.89 to $50.74 in midday training on the New York Stock Exchange.

(Reporting by Yinka Adegoke; Editing by Lisa Von Ahn, Matthew Lewis and Derek Caney)