Viacom, the owner of MTV Networks, posted a better-than-expected quarterly profit Tuesday, boosted by box office hits "Iron Man" and the latest "Indiana Jones," but U.S. cable network advertising sales growth fell below the company's projections.
U.S. ad sales at Viacom's cable networks division rose 1 percent, below the company's outlook of 3 percent to 4 percent growth.
Viacom also reaffirmed its annual profit outlook from 2008 to 2010 and expects to generate low double-digit percentage annual growth in diluted earnings per share from continuing operations.
"I have witnessed more than a few economic cycles," Viacom Executive Chairman Sumner Redstone told analysts on a conference call.
"There is opportunity even in difficult economic times." The New York-based owner of Paramount movie studios and the Nickelodeon cable network said second-quarter net profit fell to $407 million from $434 million a year earlier.
Earnings per share were 65 cents per share, up from 63 cents a year earlier, when Viacom's share count was higher. Revenue rose 21 percent to $3.86 billion.
Excluding items, Viacom's profit was 64 cents per share. On that basis, Wall Street estimated 58 cents per share, according to Reuters Estimates.
"We have entered a period of slow advertising growth," Gabelli & Co associate portfolio manager Christopher Marangi said. In the second half of the year, "it's probably more of the same or maybe a little better at 3 to 4 percent growth."
The shares of Viacom, which currently trade below its presplit levels, have fallen over 30 percent this year, compared with a more modest 11.5 percent decline for Time Warner .
"Viacom delivered strong top and bottom line results in the second quarter despite the challenges of a weakening economy and its impact on advertiser spending," Viacom Chief Executive Philippe Dauman said in a statement.
Second quarter results for filmed entertainment were boosted by 35 percent to $1.77 billion. Box office revenue rose 84 percent. Operating income from the movies division rose to $86 million from $64 million a year earlier.
But strong film results masked weaker growth in its cable networks unit, where revenue rose 11 percent to $2.14 billion, primarily boosted by sales of the "Rock Band" video game.
Cable network operating revenue rose 4 percent to $765 million.