Viacom Optimistic Despite $7.3 Million 1st-Qtr. Loss24 Apr, 2001 By: Press News
Media giant Viacom Inc., owner of MTV, Nickelodeon and the CBS and UPN networks, reported a net loss of $7.3 million in its first quarter Tuesday but remained optimistic about prospects for the rest of the year.
The loss, which amounted to zero cents per share, compared to a net loss of $384.3 million in the same period a year ago, which was largely due to a one-time accounting charge of $452 million. Without the charge, the company earned $68 million, or 10 cents a share, in the first quarter of 2000.
Viacom attributed the latest loss to higher write-downs associated with the acquisition of CBS.
The company posted a 15% increase in earnings before interest, tax and depreciation to $1.15 billion from $1 billion a year ago, as all of its business segments except radio broadcasting showed improvements over last year.
In a conference call with analysts, Viacom's president and c.o.o. Mel Karmazin said the company remained confident it could deliver a 20% increase in pre-tax earnings this year to $6.2 billion, given a few conditions.
"If there is going to be a recession, we are just not going to participate," Karmazin said. "We continue to pick up market share and outperform our competitors, and we'll do that in any kind of environment."
Like other entertainment companies, Viacom is facing the possibility of simultaneous strikes this summer of Hollywood actors and writers, which would impact Viacom both as the owner of a major studio, Paramount, as well as two broadcast networks, CBS and UPN.
Karmazin said Viacom was "concerned" but also "prepared" for the possibility of a strike. He also said the company's annual profit goals could be impacted by a soft market for pre-season sales of TV advertising, which normally get underway in May.
Nonetheless, Karmazin said the possible impact of those two risk factors would only be up to 5% of Viacom's annual pre-tax earnings.
Assuming that several acquisitions, including the $3 billion purchase of BET, had occurred a year ago, Viacom's revenues grew 6% to $5.77 billion from $5.44 billion in the same period a year ago.
Revenues and earnings grew at most of Viacom's business segments despite a difficult environment for advertising, which makes up about half of the company's revenues. Cable networks, which include MTV, Nickelodeon and VH1, had 17% higher earnings, and television earnings rose 14%.
The company's radio subsidiary, Infinity Broadcasting, had a 5% decline in earnings due to a falloff in advertising from Internet companies, which was booming last year. In February Viacom finished buying back the 36% of Infinity that it didn't already own at a cost of $13.4 billion in stock.
Viacom's class B shares were off 54 cents at $52.46 in morning trading Tuesday on the New York Stock Exchange.