News

Viacom, CBS Post Premerger Gains

2/20/2000 7:00 PM Eastern

In perhaps its last quarterly report before merging with
CBS Corp., Viacom Inc. reported revenue and operating-earnings increases fueled mainly by
its cable networks.

For the quarter ended Dec. 31, Viacom reported a 48 percent
increase in net income from continuing operations to $133 million, or 19 cents per share.
Revenue in the fourth quarter was up 7 percent to $3.6 billion, and earnings before
interest, taxes, depreciation and amortization, or cash flow, rose 18 percent to $595.2
million.

Excluding investments in its online segment and at
Blockbuster.com, the online service of its Blockbuster Entertainment video-store chain,
Viacom's net earnings from continuing operations rose 74 percent in the quarter to
$165 million, or 24 cents per share.

For the year, revenue rose 6 percent to $12.9 billion and
cash flow, excluding special charges, rose 11 percent to $2.2 billion.

At the cable networks, revenue increased 14 percent to $925
million in the quarter and cash flow jumped 19 percent to $347 million.

MTV Networks reported a 17 percent increase in revenue and
a 19 percent rise in cash flow to $304 million, largely due to increases in worldwide
advertising revenue.

MTV: Music Television finished the quarter as the top-rated
cable network in its 12- to 24-year-old target audience. Also, VH1 finished the quarter
with the highest concentration of adults aged 18 to 49 of any cable network, and
Nickelodeon was cable's top-rated network for the 17th consecutive
quarter, Viacom executives said.

At its Showtime Networks Inc. premium service,
subscriptions rose 18 percent to $23.2 million. Revenue at Showtime rose 5 percent and
cash flow rose 14 percent, reflecting continued growth in direct-broadcast satellite.

For the year, cable-network revenue increased 17 percent to
$3.05 billion and cash flow increased 24 percent to $1.05 billion.

"Viacom truly is in terrific shape; CBS is in terrific
shape," Viacom chairman Sumner Redstone said in a conference call with analysts.
"We are meeting regularly and talking about our strategy going forward. We are very
optimistic about the year 2000. With CBS, we are sure to take Viacom to new heights."

The merger should be completed in late March or early
April, and it is currently awaiting federal approval. Shareholders from both Viacom and
CBS approved the deal in December.

CBS, which released its fourth-quarter results Feb. 15,
also had one of its best quarters ever. Revenue for the company as a whole increased 24
percent to $2.2 billion. Net income from continuing operations for the quarter was $19
million, or 3 cents per share.

Fueling the growth at the cable operations was the sale of
its CBS Eye on People and CBS TeleNoticias cable networks last year. Including those
sales, operating profit more than tripled during the quarter to $34 million and cash flow
more than doubled to $62 million.

Even without those charges, the cable segment -- Country
Music Television, The Nashville Network and several regional sports networks -- did well,
reporting a 96 percent increase in cash flow during the quarter to $55 million and a
tripling of operating profit to $27 million.

CBS CEO Mel Karmazin told analysts on a conference call
that a lawsuit brought by BHC Communications Inc. -- which owns United Paramount Network
in partnership with Viacom -- would not delay the merger.

BHC filed suit shortly after Viacom initiated a
"buy-sell" clause in its contract with the company, which is owned by
Chris-Craft Industries Inc., regarding UPN.

"We have stated before that we do not believe the
lawsuit would in any way slow down the transaction," Karmazin said. "As far as
UPN, the company had an agreement that we triggered. It calls for 45 days from the date of
the trigger for Chris-Craft to either buy or sell. If they say nothing, we assume
we're going to buy it."

Redstone said during his analyst call that the suit was
"transparent and without merit."

October
November