Viacom 4th-qtr profit rises on Dreamworks purchase
NEW YORK (Reuters) - Viacom Inc. (VIAb.N), owner of the Paramount film studio and MTV cable television networks, said on Thursday quarterly profit nearly quadrupled, helped by its purchase of the DreamWorks movie studio and hefty year-ago charges.
Although earnings beat expectations, Viacom's shares fell 1 percent on lingering concerns about tepid growth in the cable advertising market and in MTV in particular, analysts said.
Sander Morris Harris analyst David Miller said he expected soft ratings at MTV and Nickelodeon's Nick-At-Nite, another Viacom property.
Miller also forecast continued weakness in the German and British TV markets, where MTV operates channels. Some 18 percent of Viacom's revenue are generated outside the United States, he said.
The company posted fourth-quarter net profit of $480.8 million, or 69 cents per share, compared with $129.5 million, or 17 cents per share, a year earlier, when profit was dragged by charges.
Viacom has been cutting jobs and restructuring in an effort to reach a wider audience that is spending as much time on the Internet and on video games as watching television.
The effort to reach a wider audience extends to the terminology it uses to sell itself to investors: No longer does Viacom tout its "cable networks," but rather "media networks."
In pursuit of those viewers dividing their time between TV, Internet and cell phones, Viacom labels itself as a "multiplatform" media company.
The company is confident it will generate $500 million in digital sales this year, mostly from online advertising. That accounts for about 4 percent of Wall Street's estimate for 2007 total revenue.
Viacom has seen traffic spike on some of its Web sites since it demanded that Google Inc.'s (GOOG.O) YouTube, the top online video-sharing site, remove Viacom's clips that were uploaded without its permission.
REVENUE TOPS VIEW
Total revenue rose 32 percent to $3.59 billion, beating the average Wall Street estimate of $3.16 billion, according to Reuters Estimates.
Viacom earned 65 cents per share before items that included charges for departing executives and restructuring, compared with analysts' estimates of 59 cents per share.
Wall Street was disappointed with gains at the company's biggest unit. Revenue at the cable networks rose 4 percent to $2.1 billion and adjusted operating profit rose 6 percent in the quarter.
Viacom executives said advertising growth will be at a "much higher" rate in the first quarter compared with the fourth quarter and "nicely higher" versus the period last year.
Film division revenue doubled, with operating profit rising to $86.3 million from an operating loss of $39.6 million.
Last year, Viacom purchased DreamWorks SKG, the live-action film studio co-founded by director Steven Spielberg, and struck a deal to distribute DreamWorks Animation films.
Viacom also said it reached a settlement with CBS Corp. (CBSa.N) in January, agreeing to pay an additional $170 million as part of a separation agreement. The two companies were split last year to appeal to different classes of shareholders.
The company expects low-double-digit percentage growth in diluted earnings per share, excluding items, on average over a three-year period.
MTV Networks said Wednesday it realigned its ad sales and marketing teams to organize around age groups and themes served by its networks -- kids and family, music-related products, and adult audiences.
Asked by an analyst if he would ever consider selling the company if the restructuring failed to yield results, Viacom Chairman Sumner Redstone said, "I have no intentions of selling this company."
The company's widely held Class B shares fell 47 cents, or 1.2 percent, to $38.57. Its Class A shares fell 95 cents, or 2.4 percent, to $38.61 on the New York Stock Exchange.
