Viacom, CBS deliver mixed results

MUMBAI: Viacom and CBS Corporation have announced their first financial results since the split of US media conglomerate Viacom.

This earnings report deliver mixed results, because it's the first one after the separation; there are historical earnings, pro forma earnings, discontinued operations and a special dividend paid to CBS.

For the fourth quarter of 2005, Viacom's net earnings decreased to $130 million from $406 million, on revenues of $2.72 billion, up nine per cent from the previous year. Cable network revenues were up 16 per cent, but entertainment revenues fell five per cent.

Viacom's full-year revenues rose 18 per cent to $9.61 billion, with 18 per cent growth in the cable networks segment and 19 percent growth in the entertainment segment. Advertisement revenues rose 18 per cent to $3.96 billion.

While media reports quoted Viacom chief executive Tom Freston saying the company still has "a good feeling" about the first quarter at its cable networks. He cautioned, however, that many advertisers are making their buys of ad time at the last minute, making it difficult to be firm about projections, and that it is coming up against difficult comparisons with last year's first quarter, when ad sales soared 26%.

Net earnings from continuing operations decreased to $1.3 billion from $1.39 billion. For the year it lost $94 million from entertainment due to movie releases not performing as well as expected and charges for severance expense of $23 million and theatrical inventory write-downs of $32 million.

Viacom executive chairman Sumner M. Redstone said, "The strong growth and performance of the exceptional businesses that comprise new Viacom in 2005 not only validates the rationale for the separation of the company, but also highlights the outstanding potential of this great new company."

"New Viacom began its life as the world's leading pure-play content business and under the leadership of Tom Freston and his experienced team, is already moving ahead rapidly to fulfill its core commitment to create great content for every imaginable platform while delivering outstanding returns for shareholders."

CBS reported a loss of $9.1 billion in the fourth quarter on charges to write down the value of its radio and television businesses. Full-year revenues stayed flat at $14.54 billion. Revenues reflected a two per cent rise in ad revenues led by growth in the television, tadio and outdoor segments offset by a decline in television license fees.

CBS president and CEO Leslie Moonves said, "I am very pleased that the separation is completed. Since the split, we announced a 14 percent increase in our dividend to demonstrate our confidence in our ability to generate strong free cash flow, a measure which showed double-digit growth for us during 2005."

CBS has been active in recent months, sealing a $325 million deal last November for a two-year-old college sports network called CSTV Networks Inc., even before its split with Viacom was formalized.

Last month it also raised its quarterly dividend from 14 cents to 16 cents, a jump of 14 percent. As it split from Viacom, CBS has said it intends to return capital to investors with dividends and other means, as its businesses generate significant amounts of cash. CBS also said it intended to sell its Paramount Parks business.

However, Moonves indicated on a conference call with investors that it was unlikely that the company would make a run at the latest media company to go on the block, Spanish-language broadcaster Univision Communications. Given CBS's already large footprint in radio and TV, Moonves said the regulatory hurdles to such a potential deal would be "extreme."

CBS is also working to shore up its radio business, which suffered another loss at the beginning of this year when the ultra-popular shock jock Howard Stern jumped to Sirius Satellite Radio. Moonves acknowledged that its radio unit has had several "challenges" including the loss of Stern, but he said the business was turning around, quoting media reports.

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