Cable Nets Propel Viacom, Which Sees Ad 'Bottom'


Viacom Inc.'s cable networks helped to drive 18-percent revenue growth and 12-percent cash-flow growth in the second quarter, even as soft ad sales affected its radio and broadcast-television properties.

In the second quarter, Viacom reported revenue of $5.7 billion and cash flow of $1.36 billion. It also reported net earnings of $17 million, or 1 cent per share, up from a loss of $496 million, or 41 cents per share, a year earlier.

At broadcast-TV network CBS, revenue was down 1 percent, to $1.6 billion, while cash flow rose 16 percent, to $360.8 million. At the Infinity Broadcasting Corp. radio properties, revenue was down 4 percent and cash flow dropped 5 percent.

At the cable networks — including MTV: Music Television, TNN: The National Network and Nickelodeon — pro forma revenue was up 7 percent, to $1.1 billion, and cash flow rose 22 percent, to $389.6 million.

In a conference call with analysts, COO Mel Karmazin said he believed the advertising market has bottomed out and adjusted cash-flow growth guidance downward for the year, from 20 percent to 13 percent.

"That's where we're going to be in the second half," Karmazin said during the conference call. "We think that is extraordinary performance in what has been, at least as the press has reported, the worst [advertising] year in at least a decade."

Karmazin practically took his company off the growing list of potential bidders for AT&T Broadband, telling analysts that Viacom is not interested in getting involved in a "capital-intensive business" like cable operations.

"Do we want to spend $80 billion so we can get carriage of MTV? I don't think so," he said.