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Viacom beats 1Q forecasts
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April 26, 2000: 3:16 p.m. ET
Company's profit is almost twice estimates, boosted by cable networks
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NEW YORK (CNNfn) - Entertainment conglomerate Viacom Inc. posted an unexpected gain in first-quarter earnings Wednesday, almost doubling profit forecasts for the period, led by strong results at its MTV and Showtime cable stations.
The New York-based company, which is in the process of buying CBS Inc. (CBS: Research, Estimates), is home to a plethora of media staples, including the syndicated television programs such as "Judge Judy," the Blockbuster Video store franchise, and the Simon & Schuster publishing house.
Viacom (VIA: Research, Estimates) reported net income of $76 million, or 11 cents a diluted share. Analysts surveyed by earnings tracker First Call forecast a 6-cents-a-share profit in the period. The company earned $68.4 million, or 8 cents a share, before an extraordinary loss in the year-earlier period.
 Viacom's results beat even the most aggressive forecasts, according to First Call, which said analysts' views ranged from 3 cents a share to 9 cents a share.
Revenue edged up 2.5 percent $3.03 billion from $2.95 billion a year earlier, also outpacing analyst's expectations.
Investors appeared to cheer Viacom results, with the company's stock rising 2-3/4 to 54-1/2 in active midday trade on Wednesday.
"Viacom is off to a strong start in 2000, paced by the continued outstanding performance of MTV Network, which turned in its fifth consecutive quarter of 20 percent-plus ad sales growth, and Showtime, which registered a 25 percent gain in (cash flow) for the first three months of the year," said Sumner Redstone, Viacom's chairman and chief executive.
Looking forward, Redstone told analysts he's very positive about the company's performance in 2000, and sees strong performance from the movie segment, which boasts the current hit, "Rules of Engagement," and could see strong returns from the summer release of "Mission Impossible II" and "Shaft."
"We are very optimistic on the rest of the year," Redstone said on a conference call.
Analysts applaud strong results
Advertising revenue was key to Viacom's growth in the quarter the company said. MTV's revenues of $550 million included a 20 percent rise in ad revenue from a year ago.
"In the second quarter and beyond, we will continue to benefit from the combination of a vibrant advertising market and strong ratings at our cable networks." Redstone said.
"We see no signs of (ad revenue) abatement, only expansion," Redstone told analysts. "The ad boom is not a 2000 phenomenon, it's not just the dot.coms. It will continue this year and the next and into the future."
 Chris Dixon, media analyst at PaineWebber, said on CNNfn's Market Coverage program that advertising will be key strength for media companies in coming years, as companies attempt the woo customers over TV, radio and online systems.
"These kind of marketing solutions is what the new world is all about and it will be companies like Viacom and of course, CBS...who define that agenda," he said. (116K WAV)(116K AIFF)
"You can certainly imagine that there will be a lot of opportunities to generate synergy between the two," said Thomas Weisel Partners analyst Gordon Hodge, who characterized Viacom's results as a "great quarter."
Regulators seen near approval of CBS deal
The company's shareholders got more good news from a report late Tuesday that the Federal Communications Commission staff is ready to recommend approval of its CBS deal.
 "Any recommendation that is positive from the commission is very important for the company," said Jordan Rohan, media analyst with Wit SoundView, in an interview early Wednesday on CNNfn's Ahead of the Curve. (96KB WAV) (96KB AIFF)
The company also said it completed a program to buy back $1 billion of its own common stock. 
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Viacom
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