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Viacom Profit Triples, Helped By Dreamworks Acquisition

AP
Thursday, 1 Mar 2007 | 11:05 AM ET

MTV owner Viacom's profits more than tripled in the fourth quarter following the addition of the DreamWorks studio last year, which swung its movie business to a profit.

Viacom, which also owns BET, VH1 and several other cable channels, said Thursday it earned $480.8 million, or 69 cents a share, in the October-December period versus $129.5 million, or 17 cents a share, in the same period a year ago.

Viacom also reported a lower tax bill and had accounting adjustments to its year-ago figures following its split-off from CBS.

On a comparable basis, Viacom's operating income increased 28% to $855.6 million from $669.6 million a year earlier. Those figures, which also exclude a tax benefit and restructuring charges, worked out to 65 cents a share.

Analysts polled by Thomson Financial were expecting 58 cents a share. Those estimates typically exclude one-time items.

The improvement was largely due to its movie business, which earned $86.3 million in the quarter versus a loss in the year-ago period of $39.6 million.

Viacom recently signed a deal with a startup company called Joost to distribute programming from its cable networks online, shortly after demanding that the Google Inc.-owned video sharing site YouTube take down more than 100,000 unauthorized clips from Viacom-owned properties.

Viacom's CEO Philippe Dauman told analysts on a conference call that the company was examining other ways of distributing its programming online following the Joost deal, but he didn't comment on specific negotiations.

"We are always happy to supplement our distribution channels," Dauman said.

Like other media companies, Viacom is trying hard to find ways to get its programming distributed online in a legal and controlled way that it can profit from, rather than seeing unauthorized clips show up on Web sites.

The issue is particularly pressing for Viacom since many of its outlets, including MTV, Comedy Central, VH1 and Nickelodeon, target a younger audience that spends an increasing amount of time online.

Viacom's cable networks business, which makes up the lion's share of its operations, reported a 6% gain in profits to $809.9 million from $761.7 million a year ago.

Overall company revenues rose 32% to $3.59 billion from $2.72 billion as it added the DreamWorks studio to its movie operations, which include the Paramount film studio.

Viacom also said it would take about $70 million in charges in 2007 as it restructures its MTV division, largely in severance charges, with about $50 million being recorded in the first quarter of this year.

Viacom split up from CBS at the beginning of 2006 and became a separate company.

A lower tax bill contributed to the improved results. Viacom's paid $208.2 million in taxes in the fourth quarter, down from $265.6 million in the same period a year ago.

For the full year, Viacom reported earnings of $1.59 billion, or $2.22 a share, versus $1.26 billion, or $1.67 a share, in 2005. Full-year revenues rose 19 percent to $11.47 billion from $9.6 billion.

Despite beating analysts' estimates, Viacom's Class B shares fell 53 cents to $38.51 in morning trading on the New York Stock Exchange amid an overall slump in the market.

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