Karmazin: Viacom Cable Nets Raising Fees

12/08/2003 9:21 AM Eastern

New York -- Affiliate fees for Viacom Inc.’s cable networks will rise next year, president and chief operating officer Mel Karmazin said at an investor conference here Monday, adding that it’s still a bargain for cable operators.

"If those who do models want to put in one number for affiliate fees, they can put in high-single-digits for Viacom," Karmazin said at the Credit Suisse First Boston LLC Media & Telecom Conference here. "It’s the biggest bargain in America."

To back up that claim, Karmazin said affiliate fees for all of Viacom’s cable networks combined total $1.75 per subscriber, per month -- dramatically less than the $2.65 per month that some published reports have said The Walt Disney Co. charges for one network: ESPN.

Viacom’s cable networks include MTV: Music Television, VH1, Nickelodeon, Black Entertainment Television, Spike TV, Country Music Television and Comedy Central, among others.

He added that in addition to the low affiliate fees, 26% of all television viewing is done through a Viacom property, 56% higher than the next-largest company.

"We’re doing that all for $1.75. If your cable bill is any more than $15 per month, we’re getting screwed," he joked.

Karmazin also addressed several published reports that Viacom was considering selling its 80% stake in video-rental giant Blockbuster Inc., adding that Viacom is not "compelled to do anything."

He said that when Viacom spun off 20% of Blockbuster to the public about three years ago, the intention was to sell the rest at another time. However, market conditions were not favorable to a spinoff. In the meantime, Karmazin said, Blockbuster is contributing significantly to Viacom’s results.

"We’ll do what is in the best interest of our shareholders, including doing nothing," he added.

Later, in a separate presentation, Blockbuster chief financial officer Larry Zine said whatever Viacom does, it will not affect operations.

"Blockbuster is operating the way it should operate," Zine said. "We’re doing whatever we can to generate growth. Viacom is a great parent company. With them or without them, I don’t think it will make a significant difference in the way we operate the business."

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