Viacom Announces Solid 2Q Results


Viacom Inc. showed some signs that an advertising recovery may be on its way,
reporting cash-flow growth of 4 percent in the second quarter and a 2 percent
increase in revenue, including a 3 percent uptick in its ad sales.

In a conference call with analysts, president Mel Karmazin said the increase
in ad revenue shows that Viacom is outperforming the market, which expects ad
revenue to climb about 2 percent this year.

For the quarter, revenue was up 2 percent to $5.85 billion and cash flow rose
4 percent to $1.42 billion. Free cash flow, or cash flow minus capital
expenditures, was up 22 percent in the period to $1.03 billion.

At its cable networks, revenue increased 4 percent to $1.1 billion, operating
income was up 9 percent to $371.9 million and cash flow rose 9 percent to $422

That growth was fueled by ratings and advertising gains at its MTV: Music
Television, Nickelodeon, TNN: The National Network, TV Land and Black
Entertainment Television. The company said revenue gains were partially offset
by declines at VH1 due to lower ratings.

On the conference call, Karmazin said that although Viacom does not feel the
need to go on an acquisition spree, the company is always looking for accretive
acquisitions. However, he did express some disappointment with the upturn in the
ad market because it took some potential targets off the sale block.

'We were sort of on one hand sorry that the ad business is turning in our
sector so quickly,' he added. 'We thought there would be some troubled companies
out there. We were hoping that they would be squeezed so that it would represent
buying opportunities. But we're patient.'

Viacom chairman Sumner Redstone praised management for its performance and
stressed that Viacom's accounting practices are sound.

'It's important to note that no matter what metric you use, Viacom continues
to deliver operating and financial strength,' Redstone said on the call. 'In the
context of what has happened in the industry, Viacom is the model of

Viacom stock closed at $35.15 per share Thursday, up 71