Advertising Drives Strong Media Results

There's no doubting it — advertising is back.

Strong ad revenues at the US and abroad lifted the results from the big players reporting today — Viacom, Discovery Communications, and even Time Warner Cable.

Bottom line: the volume of ads marketers are buying has increased, and the amount they're spending on each ad is higher as well. This strength in the first quarter bodes well for the Upfront ad sales period, when networks look to sell a big chunk of their ad inventory for the coming year.

This bodes well for a slew of media earnings next week — CBS after the bell on Tuesday, Time Warner and AOL before the market opens on Wednesday, and News Corp and Comcast after the bell Wednesday.

Viacom's US ad sales grew 11 percent and worldwide ad sales grew 12 percent. On the company's earnings call CEO Philippe Dauman pointed to growth across multiple categories — from movie ads, to automotive, insurance to candy companies. The ad business is booming for both its kids business — Nickelodeon — to the adult-oriented channels, like MTV. Going into the Upfront for Viacom's adult programming Dauman says he expects to see gains in ratings and volume. So far the kids' upfront has already sold "substantially more volume" than last year.

Viacom's success can't be attributed solely to a rebounding ad market — the company deserves a lot of credit for the rebound in ratings at MTV in particular. Plus, its movie studio has been on fire. Theatrical revenue grew 50 percent in the quarter, on the success of Oscar fare "True Grit" and "The Fighter" and animated "Rango." And despite the overall downturn in the DVD market, Viacom's home entertainment revenue grew 39 percent, and TV license fees were 30 percent higher.

Discovery's earnings were also propelled higher by advertising growth in the US and abroad, on strength in all ad categories. Excluding Discovery Health from last year's results — it's not the OWN network — US ad revenues grew 15 percent while international ad revenues grew 24 percent. Again, this isn't just about a rising tide — Discovery deserves credit for growing viewership 6 percent across its networks, with particular strength at Investigation Discovery, where ratings shot up 50 percent.

The company does have its weak spots. CEO David Zaslav acknowledged that ratings at OWN, its joint venture with Oprah Winfrey's production company, have fallen short of expectations. We'll see if Oprah joining the network once her contract with her syndicated show expires, helps boost the numbers.

Time Warner Cable doesn't have as much ad exposure as Discovery or Viacom, but it also saw a lift from advertising — revenue grew nearly 14 percent. And the other parts of the company speak to a strong consumer — more people paid for the company's 'Triple play' option and signed up for its high-speed data service. The company did lose 65,000 video subscribers, which more than anything speaks to the growing competition from the likes of AT&T's U-Verse and Verizon's FIOS.