Viacom suffers $487.6 million loss due to Blockbuster split off

MUMBAI: Media conglomerate Viacom which owns MTV, Paramount and Nickleodeon has posted a loss of $487.6 million for the third-quarter ended 30 September 2004..

Its earnings were affected by a $1.5 billion charge related to its sale of the Blockbuster home video video rental outlet.

On a more positive note without the charge, earnings and revenues both increased as the company's television, cable networks and outdoor advertising divisions all turned in better results.

Without the charge revenues increased marginally by four per cent to $5.5 billion from $5.3 billion for the same quarter last year. Ad revenues grew by six per cent $3.1 billion. Third quarter 2004 operating income of $1.34 billion increased 5% from $1.28 billion in the same quarter last year, led by gains of 13 per cent in Cable Networks, seven per cent in television and 29 per cent in outdoor.

For the nine months ended 30 September 2004 revenues increased by nine per cent to $16.2 billion from $14.9 billion. Operating income increased by 13 per cent to $3.8 billion from $3.3 billion in the same prior-year period.

Viacom expects full year revenue growth of eight per cent, operating income growth of 14 per cent and earnings per share growth of approximately 16 per cent.

In the third quarter there was a 17 per cent ad revenue growth at MTV Networks. Cable Networks affiliate fees grew eight per cent as increases at MTV Networks and Bet were partially offset by a one per cent decline at Showtime.

Radio revenues decreased by four per cent to $529 million from $552 million reflecting continued weakness in national and local advertising revenues. Operating income decreased by 17 per cent to $222 million from $266 million principally due to lower revenues coupled with higher expenses.

Blockbuster had once been a profit making operationf for Viacom. However when the prices of DVDs started falling the company started to feel the pressure.

Viacom chairman and CEO Sumner Redstone added, "Viacom is committed to returning value to its shareholders. We will continue to invest in our businesses and actively look to expand in core areas and take full advantage of our ability to purchase our stock and enhance our dividend, while at the same time, maintain our commitment to our existing credit ratings.

"On the heels of our Blockbuster split-off, which resulted in the reduction of approximately 28 million outstanding Viacom shares, we intend to aggressively reduce our equity base even further under our $8 billion stock purchase programme.

"This ongoing initiative, along with the annualised 16.7 per cent increase in our cash dividend, demonstrates not only our ability to generate significant free cash flow

but also our confidence in the long-term performance of Viacom's high-growth businesses."

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