Viacom reports impressive Q3 2002 results

NEW YORK: Media conglomerate Viacom has had a happy Q3 2002. The results show that revenues increased 10 per cent to $6.3 billion from $5.7 billion and operating income increased to $1.3 billion from $194 million in the same quarter last year.

Higher revenues and operating income in every segment and a 14 per cent overall increase in advertising revenues, led by the strength of the company's broadcast and cable networks, and television and radio stations mark this quarter's results.

Television revenues increased 14 per cent and operating income rose to $314 million from $78 million; cable networks' revenues grew 13 per cent and operating income increased 41 per cent to $511 million from $363 million; and Infinity revenues increased six per cent driven primarily by 10 per cent growth in radio, and operating income rose to $322 million from $61 million.

Cable Networks (MTV Networks, including MTV, VH1, Nickelodeon/Nick at Nite, TV Land, TNN and CMT; BET; and Showtime Networks ) revenues increased 13 per cent to $1.2 billion from $1.1 billion. Revenue and operating income increases were driven by double-digit advertising revenue growth at MTV, Nickelodeon, TV Land, TNN and BET and increases in affiliate fees. The third quarter included The 2002 MTV Video Music Awards, the most-watched show in its 19-year history.

Television revenues increased to $1.8 billion from $1.6 billion. CBS and UPN Networks combined delivered 18 per cent growth in advertising revenues, led by growth in primetime of over 20 per cent. The Stations group delivered 30 per cent year-over-year advertising revenue growth due to strong sales in the automotive, leisure and media industries as well as increased political ads and the addition of KCAL- Los Angeles, which was acquired in May 2002. KCAL contributed eight per cent of Stations revenue growth for the quarter.

Syndication revenues declined primarily, reflecting the absence of contributions from the syndication of Everybody Loves Raymond in the same quarter last year, partially offset by incremental cable sales in the current quarter. Television's 2001 results were impacted by the events of 9/11, which caused lower revenues from the cancellation and rescheduling of programming and increased news coverage costs. Television EBITDA increased 23 per cent to $349 million from $283 million.

Video revenues increased 10 per cent to $1.4 billion from $1.3 billion and operating income of $80 million increased from a loss of $318 million. Domestic and international same store sales were up 7.6 per cent and 3.6 per cent respectively.

Increased investment in rental and retail initiatives resulted in the decrease in gross margin and operating income, which was also affected by higher marketing costs to initiate new consumer programs. Blockbuster ended the third quarter of 2002 with 8,246 company-owned and franchise stores, a net increase of 395 stores over the third quarter of 2001.

In the fourth quarter of 2002, the company expects to deliver in excess of 20 per cent growth in earnings per share, operating income and EBITDA versus the same quarter last year. For the full year 2003, the company expects to deliver mid-single digit revenue growth resulting in double-digit EBITDA growth and mid-teen growth in operating income and earnings per share.

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