Viacom buys MTV
By EDITOR Joel Dreyfuss REPORTER Michael Rogers

(FORTUNE Magazine) – $ Viacom International consolidated its position in the fast-shifting tangle of cable television by buying the half of Showtime/The Movie Channel it didn't already own and all of MTV Networks, producer of MTV, the profitable music video channel. The sellers, Warner Amex, Warner Communications, and MTV Networks shareholders, could get around $690 million. Viacom, best known as a producer and distributor of network television shows, has quietly become the 11th-largest cable operator in the U.S. The company earned $30.6 million on revenues of $320 million in 1984. Viacom Chief Executive Terrence Elkes says the new acquisitions fit in well with his company's role as a program supplier. While MTV Networks also produces Nickelodeon, a children's cable channel, and VH-1, a video music channel aimed at older television viewers, the real prize is advertiser-supported MTV, which strengthens Viacom's role in the advertiser-supported side of cable television. ''People still want their pay services,'' says Elkes, ''but they are not taking the four or five services they did in the past.'' Some experts expect advertiser-supported cable to draw more dollars as it gets more established. Paul Kagan, publisher of a cable industry newsletter, says advertisers will spend $706 million on cable TV in 1985, 32% more than last year. He expects MTV to boost revenues 33% to $83 million this year. But cable programmers are having a tough time duplicating MTV's success in their advertiser-supported programs. The music channel has pulled in advertisers because it delivers a strong teenage audience that is difficult to isolate for a pitch on network TV. Says Kevin Burns, manager of broadcast and new technologies research at Ogilvy & Mather, an advertising agency: ''If you're a national advertiser and you buy teens, you're going to buy MTV.''