News

Cable Drives Viacom to Issue Dividend

7/24/2003 5:20 AM Eastern

Viacom Inc. reported its best second-quarter results ever, prompting its
board of directors to approve a quarterly cash dividend, making it one of the
few companies in the media sector to do so.

Viacom said it would issue a cash dividend of 6 cents per share Oct. 1 to
shareholders of record as of Aug. 15 of its class-A and class-B common
stock.

In a conference call with analysts, chairman Sumner Redstone said the
decision was prompted by changes in the tax laws, which made issuing dividends
more attractive to companies, and a desire to attract a broader shareholder
base.

He stressed that the dividend will not affect Viacom’s ability to make
acquisitions. Viacom is said to be one of five bidders for Vivendi Universal’s
U.S. entertainment assets.

Revenue for the period rose 10% to $6.4 billion and operating income before
depreciation and amortization (formerly called earnings before interest, taxes,
depreciation and amortization, or EBITDA) was up 10.3% to $659.6 million.

Free cash flow -- or cash flow after interest payments and capital
expenditures are made -- was $890 million, down from $1.03 billion in the same
period last year. Viacom said that increased principally due to changes in
working capital, higher cash taxes and capital expenditures versus the second
quarter of 2002. For the six-month period, free cash flow was up slightly to
$1.48 billion from $1.41 billion.

Net income for the quarter was $660 million (or 37 cents per share), compared
with $546.5 million (31 cents) in the same period last year.

Fueling that growth was a strong quarter in its cable networks. Cable revenue
increased 22% in the quarter to $1.35 billion and operating income before
depreciation and amortization rose 28% to $541 million.

Ad revenue at the cable networks was up 31%, spurred by a 33% rise in ad
sales at MTV Networks and a 15% increase at Black Entertainment Television.
Comedy Central contributed about 7% to ad-sales growth in the second
quarter.

Based on the strong advertising growth, Viacom increased its full-year
guidance slightly, expecting high-single-digit revenue growth and double-digit
operating-income growth for 2003. The media conglomerate also expects mid-teen
growth in net earnings and earnings per share for the year.

Viacom class-A stock closed trading Thursday at $44.45 per share, up $1.50 apiece, or nearly 3.5%.

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