Viacom's ( VIAB) future is up in the air, but its stock continues to lose altitude.

With new top managers, a major split-off in the works, and a fluid situation at its radio business, the New York media giant is in the midst of some major transitions.

And while the company will no doubt update the Street on these issues when it reports second-quarter earnings Thursday morning, it seems unlikely that Wall Street's open questions will be answered with any degree of finality.

Meanwhile, battered by uncertainty -- or, perhaps, a creeping sense of more permanent change for the worse -- Viacom's stock continues its drift downward for the year, hitting lows last seen a year ago March and performing noticeably worse than big-media brethren Time Warner ( TWX) and Disney ( DIS).

Viacom is a good company that has done "intelligent" long-term things recently, says Morris Mark, president of Mark Asset Management. But questions about the company's future remain open, says Mark, who doesn't hold any Viacom shares.

"We really want to wait and see what happens after they do the Blockbuster ( BBI) exchange offer," he says. "Do they buy stock, or do they buy something else?"

Viacom's stock rose 9 cents Tuesday to $33.76, leaving it down 24% from the New Year's Eve close of $44.24.

Three Questions

Going into the quarterly call, at least three ongoing stories at Viacom loom over its financial results for the quarter ended June 30.

First is the executive suite. This is the first quarter in years that Viacom is finishing without Mel Karmazin as president and chief operating officer, following the June 1 announcement of his resignation . Viacom veterans Tom Freston and Les Moonves are now sharing the posts once held by Karmazin, but they don't have many workweeks under their belt in the new slot. Investors are eager to get a sense of how their presence changes the company's operating style under Chairman and CEO Sumner Redstone. Also unknown: Who will be replacing -- and to what effect -- Viacom Entertainment Group Chairman Jonathan Dolgen, who resigned in the wake of not being selected to be a partial Karmazin replacement.

Issue No. 2 is the split-off of majority-owned Blockbuster, and the stock buyback that Redstone has promised in the wake of that deal. Some of the unknowns here are the terms of the Blockbuster split-off (under which Viacom shareholders could trade stock for that of Blockbuster), the number of Viacom shares that will be brought in as part of that deal, and the ferocity with which Viacom will buy back further shares.

With media analysts from Banc of America and Morgan Stanley analyst Rich Bilotti arguing that what investors want is payout in the form of stock buybacks or dividends, the size of the buyback will be a point of interest. Bilotti argues that the Blockbuster trade-in part of the buyback has been priced into Viacom's stock, but the subsequent buyback hasn't. (Bilotti has an equal weight rating on Viacom and a price target of $43; his firm has received recent investment banking compensation from Viacom.)

Static

The final uncertainty dogging Viacom is radio, which accounted for 14% of first-quarter earnings before interest, taxes, depreciation and amortization, and which was one of Karmazin's frustrations before leaving. Executives indicated recently that the company could sell up to 50 of its smaller stations. In recent weeks, analysts have written of overall weakness in the radio industry , and firms including Schwab Soundview and Merrill Lynch have lowered their estimates for Viacom's radio arm.

In the latest sign of radio malaise, industry giant Clear Channel ( CCU) acknowledged what listeners and advertisers already knew: that the supply of radio advertising exceeds the demand. Starting Jan. 1, Clear Channel says it will impose "a new and significantly lower ceiling" on the amount of advertising per hour across its stations.

For the record, analysts are expecting revenue of $6.8 billion for Viacom's latest quarter, and earnings per share of 43 cents. The EBITDA expectation is for $1.72 billion.

For the full year, Viacom has been forecasting revenue growth of 5% to 7%, operating income growth of 12% to 14% and earnings per share growth of 13% to 15%. Those numbers exclude a 2003 noncash charge related to Blockbuster and a 2004 federal tax audit benefit, and are clouded by the Blockbuster split-off.

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