×

Viacom's Profit Boosted by Two Box Office Hits

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.

viacom_logo.jpg
CNBC.com

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.