Viacom Inc. reported an $18.4 billion loss ($10.99 per share) in the fourth quarter, primarily due to a massive $18 billion noncash goodwill impairment charge for its radio and outdoor-advertising division.
Viacom said the impairment charge was mainly due to accounting rules that require a company to annually recalculate the value of intangible assets to reflect business conditions.
Viacom’s radio division has been struggling for years. The company announced last year that it would seek to swap or sell some of its radio stations in nonstrategic markets. Co-president and co-chief operating officer Les Moonves said on a conference call with analysts that some radio deals could be announced in the next few months.
The combination of the write-down and lukewarm guidance for the rest of the year -- Viacom said it expects mid-single-digit revenue and operating-income growth in 2005, below the double-digit forecasts of previous years -- helped to drive down Viacom shares Thursday.
Viacom stock fell as low as $34.91 (down $1.26 each) in early trading Thursday before rebounding in the afternoon to $35.40 each, down 77 cents per share.
While radio and outdoor had their problems, Viacom’s cable and broadcast networks continued to report strong growth.
At the cable networks, revenue in the period was up 15% to $1.9 billion and operating income rose 9% to $691 million. At its broadcast division -- which includes CBS, UPN and several television stations -- revenue rose 5.1% to $2.2 billion and operating income was up 22% to $295 million.
Chairman Sumner Redstone said on the conference call that 2004 was a transition year, and that the media giant would focus on growing its businesses in 2005 and returning value to shareholders. That could possibly take the form of additional stock buybacks -- Viacom has already repurchased $3 billion of its shares, part of an $8 billion buyback authorization.
“Our core businesses are strong and getting stronger. We have a great deal of optimism and confidence as we move into 2005, which, I promise you, will be remembered as the year of the reinvention of Viacom, the year when the tough calls were made, the year when lots of compelling ideas were put into action, the year we laid the foundation for this company’s resurgence,” Redstone said on the conference call.
He added that Viacom would achieve those goals trough continuing to invest in its core television business, small tuck-in acquisitions and organic growth.