* Q1 EPS $0.29, beats Wall Street view $0.26
* Q1 rev falls 7 pct to $2.91 bln vs Street view $2.98 bln
* CEO sees signs of advertising stabilization
* Shares up 2 pct, after rising as much as 5.5 pct
(Adds analyst comment, additional comments from Dauman)
By Paul Thomasch
NEW YORK, April 30 Viacom Inc VIAb.N Chief
Executive Philippe Dauman joined the list of media executives
who see a bright side to their quarterly financials: Ad
spending may be down, but at least it's not getting worse.
As they say in media circles these days, flat is the new
up, so indications from industry bigwigs that advertising has
stabilized seems to be reason enough for investors to cheer.
Shares of Viacom rose as much as 5.5 percent on Thursday
morning, even after the owner of MTV Networks and Paramount
film studios reported declines of 34 percent in profit and 7
percent in revenue for its first quarter.
"There is a growing number of companies out there, even
those in weakened market sectors, that are seizing the
opportunity to grab market share, build equity in their brands
and solidify their customer base," Dauman said.
"Importantly, we are not seeing any further deterioration.
While it is too soon to make a call, over the past several
weeks, we have seen the advertising markets stabilize," he
added on a conference call with analysts and investors.
While not getting any worse, few executives are ready to
say that the advertising market is strengthening after major
cutbacks by companies hoping to save money wherever they can.
Indeed, experts caution that if advertising revenue has
stabilized, it has done so at extremely depressed levels. At
Viacom, which is also home to Nickelodeon and Comedy Central,
advertising revenue fell 9 percent domestically and 11 percent
But Dauman and others have said marketers appear to be
growing more confident about the economic outlook, which is
still threatened by everything from job losses and depressed
housing prices to the swine flu.
"While these recessionary conditions persist, we have seen
signs in the last several weeks that the economy may be
stabilizing," he said. "We are by no means out of the woods
yet, but I am confident in our ability to manage through the
He added, "I think you see out there and recent statistics
are bearing it out and the market is bearing it out that our
customers are starting to feel more confident about a recovery
emerging later in the year and going into next year."
In earlier earnings reports, USA Today owner Gannett Co
(GCI.N) and magazine publisher and TV station owner Meredith
Corp (MDP.N) offered similar thoughts about the outlook.
Hopes of a somewhat healthier advertising market, in fact,
have underpinned media stocks for weeks. CBS Corp (CBS.N), Time
Warner (TWX.N) and News Corp (NWSA.O) have all seen substantial
gains in the last month, outperforming the broader Standard &
Poor's 500 rise of 7 percent [ID:nN27325494].
Still, the current advertising crash -- the worst since the
early 1980s -- began later than the broader economic recession
and most expected it to trail any recovery by about six months.
And not every company has been as upbeat about the outlook at
Time Warner on Wednesday it reported stronger-than-expected
quarterly profit and affirmed its 2009 outlook, but said it
expected a mid-single-digits advertising revenue decline in the
second quarter and warned that advertisers are increasingly
canceling TV commercial purchases.
Bernstein analyst Michael Nathanson wrote in a research
note that Time Warner's comments that advertisers have been
canceling more commitments for commercial time in the late
summer and early fall "puts at risk the thesis that the second
quarter 2009 will mark the trough in advertising growth."
It suggests, he said, "that advertising growth could
continue decelerating through the third quarter 2009. if all
else remains equal."
At Viacom, advertising accounts for about 30 percent of
annual revenue and executives have had the added burden of
trying to turnaround poor ratings at some of its cable
networks, specifically MTV.
In the most recent quarter, it was also hurt by the
stronger dollar, a drop in sales of its popular "Rock Band"
video game and lower sales of DVDs, partly due to the lower
number of titles released this year.
Overall, Viacom's first-quarter profit fell to $177
million, or 29 cents a share, from $270 million, or 42 cents a
share, in the period a year earlier. Revenue fell to $2.91
Analysts were looking for profit per share of 26 cents on
revenue of $2.98 billion, according to Reuters Estimates.
(Reporting by Paul Thomasch; Editing by Tiffany Wu)