Following the lead of its crosstown rival,
Thursday posted a mixed third quarter and reiterated its financial outlook.
The New York media giant said strong cable, video and television results outpaced a weak local advertising business -- which influences the company's TV station and radio station revenue -- in its latest quarter. Viacom's release came just a month after the company, which had been a darling of media investors,
shocked Wall Street by warning of a slowdown in its ad business.
For the third quarter ended Sept. 30, earnings rose to $700 million, or 40 cents a share, from $640 million, or 36 cents a share, a year ago. Revenue rose to $6.6 billion from $6.3 billion a year earlier. In keeping with the numbers
posted yesterday by New York media giant
, Viacom's results were stronger than expected on the bottom line but a bit light on the top: Wall Street analysts had forecast third-quarter earnings of 38 cents a share on revenue of $6.7 billion.
Operating income rose 7% to $1.38 billion, and free cash flow surged to $708 million from $214 million a year ago, reflecting higher operating income as well as working capital improvements including lower investments in
(BBI:NYSE) merchandise inventory.
The company said a strong contributor to third-quarter revenue was the advertising segment, where revenue rose 8% to $2.88 billion. "We delivered top line growth in nearly every business area and brought in significant operating income gains, all despite slower-than-expected growth in local advertising that did not keep pace with gains in the national ad market," CEO Sumner Redstone said. For 2004, he projected "expectations of a continued economic resurgence, a return to the historic mix of growth in advertising markets and the favorable impact of unique programming and political events during the coming year."
For coming periods, Viacom reaffirmed its expectation to deliver mid- to high-single digit percentage growth in revenue and operating income for full year 2003, with low- to mid-teen growth in earnings per share. For the full year 2004, Viacom said it expects to deliver revenue growth of 5% to 7%, resulting in operating income growth of 12% to 14% and earnings-per-share growth of 13% to 15%.
Analysts expect Viacom to earn 39 cents a share on revenue of $7.3 billion next quarter, and make $1.65 a share on revenue of $28.4 billion next year.
"Viacom delivered the best third-quarter performance in its history with segment operating income gains of 20% in Cable Networks, 25% in Video, and nearly 20% in Television," President Mel Karmazin said. "We continue to see positive momentum in our national advertising platforms, which are benefiting from a strong upfront at CBS, MTV Networks and BET and significant growth in syndication markets."
On Wednesday, Viacom finished at $38.86.