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NEW YORK (MONEY Magazine) - This past year has been tough on the media conglomerate, and not just because of that "wardrobe malfunction" and the 60 Minutes Wednesday blowup over President Bush's National Guard records.
In June, president Mel Karmazin departed because of ongoing friction with chief executive Sumner Redstone. Karmazin was heir apparent to the 81-year-old Redstone.
Some of Viacom's businesses, such as its radio division, are underperforming. And credit rating agencies may downgrade Viacom's A-grade credit if the company takes on more debt.
But those problems sound worse than they are. Viacom's profits are estimated to have grown about 11 percent in 2004, and growth may accelerate this year.
The firm's cable networks are doing well. CBS isn't suffering financially and should show better results as the advertising upturn continues.
In addition, the company plans to continue buying back stock, which bolsters margins and growth in earnings per share.
As for the company's debt rating, the agencies were reacting to Redstone's statement that he would be willing to take on more debt for the right acquisition. But don't worry -- he's not one to throw money around.
Consider that before spinning off the movie-rental chain Blockbuster, Viacom extracted a special dividend of more than $700 million. Redstone remains one of the shrewdest of dealmakers.
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