MUMBAI: Media conglomerate Viacom, which owns MTV, Nickelodeon and Paramount among other properties, has reported results for the third quarter ended 30 September, 2005.
Revenues increased by 10 per cent to $5.9 billion from $5.4 billion for the same quarter last year, led by growth of 15 per cent in cable networks and 54 per cent in the entertainment segment,as well as increases in the outdoor and radio divisions.
Ad revenues climbed nine per cent led by gains of 17 per cent at cable networks and seven per cent at television. Operating income rose by five per cent to $1.4 billion. The results included recording an impairment charge of approximately $19 million related to the sale of two TV stations. Also, damage from hurricanes Katrina and Rita cost the company $7 million in revenues and $15 million in expenses, principally in outdoor, television and cable networks segments. In addition, Viacom recorded expenses of $17 million associated with its previously announced plans to separate into two publicly traded companies by the end of the year.
For the third quarter of 2005, Viacoms free cash flow increased to $879 million from $543 million for the same prior-year period, as higher earnings from continuing operations and improvements in working capital were partially offset by higher cash taxes and increases in capital expenditures. For the nine months ended 30 September, 2005, revenues increased by nine per cent to $17.3 billion and operating income increased be five per cent to $4 billion.
For the quarter, television revenues decreased by two pe cent to $2.2 billion as as seven per cent growth in advertising revenues was more than offset by lower television license revenues. Ad revenues increased 11 per cent at CBS and UPN Networks principally due to the strength of primetime and sports. The Stations group advertising revenues increased by one per cent.
Television license revenues decreased by 25 per cent primarily due to fewer titles available for initial syndication versus the prior years third quarter which included the syndication availability of CSI: Crime Scene Investigation and Girlfriends. Affiliate fees at Showtime Networks increased by six per cent. Operating income for Television decreased by 19 per cent to $376 million from $466 million principally due to lower television license revenues. Televisions operating income as a percentage of revenues was 17 per cent versus 21 per cent in the third quarter of 2004.
Viacom chairman and CEO Sumner M. Redstone said,Our operating results for the third quarter not only have us on track for achieving our guidance for the year, but also highlight the rationale and promise of our proposed separation into two companies, which we now expect to complete by the end of the year. The significant strengths of the new Viacom to deliver consistent double digit bottom line growth and the proven cash generation ability of CBS Corporation will underpin their performance and define their attractiveness to investors in the future.
For the third quarter of 2005, we exhibited revenue growth in nearly every major segment, paced by ad sales growth at MTV Networks and Bet, as well as at CBS and UPN. Our radio and television stations also turned in higher results that outpaced their respective industries and our motion picture operations turned in its best summer ever. Operating income gains from cable networks, entertainment and outdoor fueled a five per cent operating income growth in the quarter and more than offset declines in the Television segment, where ad sales increases of seven per cent were unable to match results from the year-earlier quarter which were driven primarily by the strong initial television syndication sales of the CBS hit franchise series CSI.
"Additionally, the superior cash flow generation of our operations enabled us to return value to shareholders through our continuing stock purchase programme, which was a major contributor to our 12 per cent per diluted share increase in net earnings from continuing operations in the quarter.
