Viacom's first quarter revenues up by 5 per cent

MUMBAI: Media conglomerate Viacom has reported a hike in revenues for the first quarter ended 31 March 2005. Revenues increased by five per cent to $5.6 billion from $5.3 billion for the same quarter last year.

This was led by growth in nearly every business segment and by 19 per cent gains in Cable Networks.

Ad revenues increased by five per cent. Operating income increased by seven per cent to $1.1 billion from $1.05 billion led by increases of 20 per cent in cable networks, 20 per cent in the outdoor division and 10 per cent in entertainment.

On the flip side net earnings from continuing operations were $585 million compared to $618 million for the first quarter of 2004. The television segment revenues of CBS and UPN as well as income generated through syndication declined by five per cent to $2.1 billion from $2.3 billion.

This was due to lower advertising revenues from the CBS/UPN Networks and the Stations group principally due to the absence of the Super Bowl and lower political ad spending and TV licence revenues.

Advertising revenues declined by four per cent at CBS and UPN Networks combined and at the Stations group.

Lower TV licence revenues principally reflected the absence of licence fees for Frasier and Hollywood Squares recorded in the same quarter a year ago.

The previous year's quarter had also benefitted from the renewals of Everybody Loves Raymond by incumbent stations and an international licensing agreement for certain Star Trek series.

TV expenses declined due to lower sports rights partially offset by increased advertising and promotional expenses. Operating income for the TV segment decreased by eight per cent to $304 million from $331 million.

Television's operating income as a percentage of revenues was 14 per cent versus 15 per cent in the first quarter of 2004.

Viacom's free cash flow for the first quarter of 2005 declined by two per cent to $828 million from $847 million for the same prior-year period.

This was principally due to higher cash taxes, increases in capital expenditures and changes in working capital. Their effect was partially offset by increased earnings.

Viacom chairman and CEO Sumner M Redstone said, "Although TV revenue and operating income declined in the first quarter because of the absence of the Super Bowl and political ad spending, CBS is going into the upfront advertising season with the strongest ratings and demographic mix in over 10 years, which bodes very well for us for the rest of 2005 and into 2006.

"We continue to explore the separation of Viacom into two new and focussed entities that could better position our businesses for continued growth and enhance shareholder return.

"We are diligently working to determine and resolve all the issues raised by the proposed transaction and expect to complete the analysis in the second quarter."

The company states that it is on track to deliver mid single-digit growth in revenues and operating income and high single-digit growth in earnings per share.

Cable networks ad revenue for the quarter grew by 27 per cent and was led by gains at MTV International, Nickelodeon, Comedy Central, MTV, VH1 and Bet.

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