DOW JONES NEWSWIRES
Viacom Inc.'s (VIA) first-quarter net income fell 34% on
continuing advertising woes and weakness in its
filmed-entertainment division.
The media company, which owns cable-TV channels such as MTV and
Comedy Central, has been making deals with advertisers who market
their products across television, the Web and mobile devices. But
recently, it has seen lower ratings at some of its cable channels.
Among problems worrying analysts are higher startup losses at its
pay-TV venture and lower sales of "Rock Band" video-game
hardware.
Media companies continue to be hurt by declining advertising
sales and uncertainty over the transition to digital content. Chief
Executive Philippe Dauman said earlier this month there was
unlikely to be significant consumer backlash against "TV
Everywhere," an industry plan to tie online TV-show viewing to a
subscription to a cable, satellite or telecommunications service.
The plan would help make up for what companies fear will be revenue
lost to viewers going online to watch shows instead of watching
TV.
Dauman said Thursday the company further reduced its debt during
the quarter. He said the advertising market remained soft as
marketers continue to cut back their spending, but added the
company's cable programming and movie businesses are
well-positioned.
Viacom said its total debt outstanding fell to $7.37 billion as
of March 31 from $8 billion as of Dec. 31. However, its cash
balance plunged to $259 million from $792 million in the same
period.
Meanwhile, the company posted net income of $180 million, or 29
a share, down from $274 million, or 42 cents a share, a year
earlier. The prior-year results included a 2-cent impairment
charge.
Revenue decreased 6.8% to $2.91 billion.
Analysts polled by Thomson Reuters expected earnings of 26 cents
on revenue of $2.97 billion.
The networks division, which includes MTV, Comedy Central and
Nickelodeon, saw earnings decline 9.4% as revenue fell 7.5% amid an
11% drop in worldwide ad revenue. The segment was also hurt by a
challenging comparison because of strong "Rock Band" sales a year
earlier.
Revenue at the filmed-entertainment segment fell 5.1% as the
segment's loss widened on higher print and advertising expenses
related to its film "Monsters vs. Aliens" and fewer
home-entertainment titles released.
Meanwhile, Executive Chairman Sumner Redstone's family holding
company, National Amusements Inc., reached an agreement with
lenders last month, scoring a reprieve after months of uncertainty
over the fate of its towering debt. Redstone and his family will
have to sell assets to repay the debt by the end of next year, but
the assets will be of their choosing - something he pushed hard for
to avoid selling his controlling interest in Viacom or CBS Corp.
(CBS).
Viacom's shares closed Wednesday at $20.44 and haven't traded
premarket.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com