Viacom beats Wall Street with $1.1 bil Q1 loss25 Apr, 2002 By: George Szalai
NEW YORK -- Entertainment giant Viacom Inc. reported a higher first-quarter loss of $1.1 billion Thursday as revenue and cash flow declined slightly and the firm took a $1.5 billion writedown on a change in goodwill accounting standards.
Excluding the writedown, Viacom exceeded most Wall Street expectations for the quarter as the cable networks, video rental and film operations brought in solid gains.
Weighing in on an ongoing debate about the timing of an advertising recovery, Viacom Thursday predicted that its advertising revenue will see a year-over-year increase in the second quarter for the first time in a year.
On a conference call with Wall Street, Chairman and CEO Sumner Redstone along with president Mel Karmazin spent most time giving bullish assessments of current advertising trends. Among other things, they said advertising demand and pricing was up strongly across all media in the second quarter, while ad cancellations were down significantlty.
Scatter market pricing at CBS is up 10 percent-15 percent year-over-year in the second quarter, while third-quarter scatter is trending up 15 percent, according to Karmazin.
Before the opening bell, Viacom posted a loss of $1.1 billion, compared with a loss of $7 million a year earlier. The latest figure included a $1.5 billion non-cash impairment charge for Viacom's stake in Blockbuster. While most major entertainment giants have been taking such charges for recent acquisitions, Viacom management emphasized it took no additional charge for its purchase of CBS Corp. in 2000. Wednesday night, AOL Time Warner took the largest charge in U.S. corporate history as it wrote down $54 billion in goodwill.
Excluding the effect of the change in goodwill accounting for the latest period and the year-ago quarter, Viacom recorded a profit of $367 million, up from $354 million.
Viacom's first-quarter revenue fell 1 percent to $5.7 billion, while cash flow declined 5 percent to $1.1 billion.
For the full-year 2002, the conglomerate still expects double-digit cash flow growth.
As he has done in recent months, Redstone Thursday once again lauded Karmazin, with whom he has clashed behind the scenes. Viacom's ability to outperform its peers was due to its "Incomparable management team led by Mel, which continue to do such an extraordinary job," Redstone said on the investor call.