Viacom's View Is All Roses

Again, typically, Karmazin remained unfazed by continuing weakness at the company's radio division, Infinity. "I can't think of any better business in the United States than the radio business," he said. Radio, he said, "is a free cash-flow machine."

Though in 2003 some advertising dollars that might have been slated for radio were shifted to TV instead, Karmazin said he believed that the tightened TV inventory next year, created by greater demand for political advertising, would shift dollars back from TV to radio. Karmazin said he was confident that 2004 would be the best year ever -- in terms of revenue, operating income before depreciation and amortization, and free cash flow -- "in the great history of Infinity."

One of the biggest problems at Infinity, said Karmazin, was the performance of the 102.7 FM radio station in New York City. Much of the troubles at the station can be traced to the firing of on-air personalities Opie and Anthony in 2002, in the wake of a contest that they ran which encouraged people to have sex in public places in and around New York City. The contest backfired after a participating couple was caught having sex -- or, perhaps, simulating it -- in St. Patrick's Cathedral.

Despite the financial hit that Viacom took, Karmazin said he had no regrets about the firings. "We made a decision that what Opie and Anthony did on the radio was not acceptable to Viacom at any price. ... We will not tolerate that kind of programming."

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