Strong NumbersOverall, Viacom's operations performed better than expected in the first quarter. The company reported revenue of $6.05 billion, just ahead of the Thomson Financial/First Call expectation of $6.03 billion and up 7% from the first-quarter figure for 2002. Earnings before interest, taxes, depreciation and amortization -- a common bottom-line yardstick for media companies -- grew 12% to $1.23 billion, a few percentage points past most analysts' growth projections. Net earnings before the cumulative effect of change in accounting principle amounted to 26 cents a share, ahead of the First Call consensus of 25 cents. Within Viacom, operating income grew 21% at its cable networks, rose 13% at its broadcast TV operations, and increased 25% at its video operations, the majority-owned Blockbuster .
NormalcyCommenting to analysts about the state of the advertising market following the Iraqi war, Karmazin said, "Everything is principally back to normal." Advertising dollars are strong at both the local and national levels, he said, using the automotive and retailing industries as an example. Among major national advertisers, Karmazin said he could think of one hotel chain and one airline -- neither of which he named -- that cited the war as a reason for canceling advertising with Viacom. "That's how few there are that really have canceled as compared to 'adjusted,'" he said. Viacom's cable networks lost perhaps $2 million in revenue because of the war, he said, but he was inclined to think that $2 million was spent subsequently.
|Holding Pattern |
Up and down at Viacom
But Karmazin said the war wasn't to blame for radio's poor performance in the quarter, as sales dropped 2% from year-ago figures. "There's no reason other than reasons related to our sales organization," he said. "The radio industry has done a horrible job in providing leadership in selling advertising," he added later. Karmazin said the first meeting he was having after the conference call was with executives at the company's New York radio stations. "So we're right on it," he said. The trend across the rest of the industry has yet to manifest itself. Other radio operators such as Clear Channel ( CCU - Get Report), Emmis ( EMMS - Get Report) and Cox Radio have yet to report first-quarter results, though Radio One ( ROIAK) has reaffirmed that broadcast revenue will be up at least 8% and station operating income will rise at least 10%.