MTV, BET Drive Strong Viacom Earnings

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Viacom reported stronger-than-expected second-quarter results Thursday, driven by increases at its media-networks and filmed-entertainment divisions.

Revenue was up 13% in the second quarter to $3.2 billion, while operating income rose 6% to $702 million. Driving that growth was the media-networks division, which includes MTV Networks and BET Networks, with a 10% revenue increase to $1.9 billion and a 3% gain in operating income to $734 million.

At filmed entertainment, revenue rose 20% to $1.3 billion and operating income increased by nearly $17 million from $4.8 million in 2006 to $21.4 million in the most recent period.

On a conference call with analysts, Viacom CEO Philippe Dauman said the cable upfront market is shaping up to be particularly strong. He said pricing increases in the adult upfront were in the low double-digits and the total dollar value was slightly higher than last year. But it could have been even higher.

“We deliberately turned away business because of the strong scatter pricing that we see ahead,” Dauman said.

Dauman added that fears that the kids' upfront would be weak -- a premise fostered by Time Warner during its earnings call Wednesday -- were unwarranted. Although the kids’ upfront isn’t over yet, Viacom projected a double-digit increase in overall dollar volume, Dauman said.

“This performance reflects the fact that we have some of the most desirable audiences for advertisers,” Dauman said on the call.

Viacom also is gearing up for the advent of commercial ratings next year.

Dauman said Viacom is “reinventing” the commercial pod and experimenting with several different concepts to maximize viewer retention during commercials, including reducing the length of commercial pods and increasing the number of them, introducing programming elements inside the commercial pods and focusing on the order the commercials appear within the pods to ensure that they are engaging to consumers.

Viacom stock was up by 80 cents per share to $38.80 each in afternoon trading Thursday.

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