NEW YORK – Viacom Inc. (VIAB), the media conglomerate that owns CBS and MTV, reported Tuesday that its net income fell from a year ago when it recorded a tax benefit, but revenues rose 5 percent on growth in its cable networks division.
Viacom earned $585 million, or 36 cents a share, in the January-March period, down from $710.5 million, or 41 cents a share, a year ago
The year-ago results Included a $111 million benefit from the resolution of a tax audit from 1997 through 2000. Without the boost from the tax ruling, its latest earnings rose 15 percent from $508 million or 29 cents per share a year ago.
The lastest results were also ahead of the 31 cents per share that analysts surveyed by Thomson Financial had been expecting. Viacom's widely traded Class B shares rose 76 cents or 2.2 percent to $34.72 on the New York Stock Exchange (search).
Revenue rose 5 percent to $5.58 billion from $5.30 billion a year ago, led by a 19 percent revenue gain in the company's cable networks division, which includes MTV (search), VH1 and Nickelodeon. Profits there grew 20 percent.
Television revenues fell 5 percent due to lower advertising revenues from the CBS and UPN Networks and the company's stations group, mostly due to the absence of the Super Bowl (search) and lower political ad spending.
Viacom's radio business continued to struggle, reporting a 5 percent decline in profits despite a 2 percent increase in revenues. The company attributed the decline to higher costs for programming, promotion and employee-related expenses.
Last year the company took an $18 billion write-down to reflect the declining value of its radio and outdoor advertising businesses and said it would trim down its radio portfolio to focus on larger markets.
Viacom is also considering a breakup of the company into two entities, one centered around its broadcast television business and another anchored by MTV and the other cable networks. The move is seen as an effort to revive Viacom's lagging stock price.
Sumner Redstone (search), Viacom's CEO, said the company expected to complete its analysis of the breakup proposal by the end of the current quarter.
On a conference call with analysts and investors, Redstone said the company was making "good progress" on the breakup plan. "I am personally committed to achieving this separation," Redstone said.
Viacom is hoping that the breakup will lead investors to assign a higher value to the fast-growing cable networks division, while the high cash generation of the radio and television properties would appeal to other investors.
Tom Freston, the former MTV chief, would lead the new company built around the cable networks, while former CBS leader Leslie Moonves would head up the other company.
For 2005, Viacom said it is on track to deliver mid single-digit growth in revenue and operating income and high single-digit growth in earnings per share.