Copyright 2002

[ February 13th 2002 ]

Entertainment behemoth Viacom Inc. on Wednesday posted a fourth-quarter loss, hurt by weakness in the advertising market that is expected to continue in the current quarter. The company, which owns the CBS television network, MTV and the Paramount film studios, reiterated its forecast for double-digit cash flow growth this year but said the soft economic trends of the 2001 fourth quarter would persist.

Viacom's Infinity radio division was hit hardest by the ad slump, but its TV stations also reported weaker ads revenues and its cable networks also felt the pinch. Viacom reported a fourth-quarter net loss of $43 million, or 2 cents a share, compared with a profit of $30 million, or 2 cents a share, a year earlier. The loss included $159 million in restructuring charges at its MTV Networks, UPN television network, and Blockbuster video rental chains, and a $288 million gain from TV station swaps and other items.

Excluding these unusual items, the company reported a loss of $140 million, or 8 cents a share. Wall Street analysts' consensus estimate was a loss of 11 cents a share, with loss estimates ranging from 3 cents to 15 cents, according to Thomson Financial/First Call. Fourth-quarter revenue dipped 5 percent to $6.04 billion from $6.36 billion a year earlier, reflecting the weaker advertising market. Analysts' revenue estimates ranged from $5.9 billion to $6.3 billion.

The company's television unit posted a 5 percent increase in revenue and a 1 percent increase in cash flow in the fourth quarter, excluding a $53 million restructuring charge taken by the UPN network, which was combined with CBS under a single operating umbrella. Television results were bolstered by ad rate and audience rating increases at the CBS network, home to such shows as "Survivor." But this was offset by weaker ad revenues at television stations.

Excluding a $67 million charge for job cuts at MTV Networks, Viacom's cable networks saw cash flow rise 15 percent, helped by cost cuts, despite a 4 percent decline in revenues. At the Infinity radio division, revenue dropped 11 percent and cash flow fell 20 percent.

Viacom's Blockbuster video unit posted a 1 percent increase in revenues and a 15 percent increase in cash flow, excluding a $39 million charge for shifting inventory more toward DVDs and away from video tapes. The entertainment unit, which includes the Paramount division, saw revenue rise 12 percent, with a 13 percent increase in cash flow, helped by video releases such as "Lara Croft: Tomb Raider" and films such as "Jimmy Neutron."

Viacom also said on Wednesday it would buy Los Angeles TV station KCAL from Young Broadcasting Inc. for $650 million in cash, giving Viacom a second station, or a "duopoly," in one of the largest U.S. markets.

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