Viacom ( VIAB) posted a solid secondquarter and shrugged off any major media-merger talk.

The media and entertainment conglomerate metsecond-quarter estimates, with growth in cable andtelevision offsetting weakness in radio, outdoor,feature films and home video. Meanwhile, CEO SumnerRedstone reiterated the company's aversion to any bigdeals, saying it would stick to its knitting.

"We intend to continue to capitalize onopportunities that present themselves," he said,noting recent minor acquisitions. "That said, we don'tpresently see the need to do any major deals. Thecompany intends to resume its stock buyback programfollowing our separation from Blockbuster ( BBI)."

Results for the quarter, which saw ViacomPresident Mel Karmazin depart from the company, alsoreflect $56 million in severance charges.

For the second quarter ended June 30, Viacomreported earnings of $754 million, or 43 cents pershare, including a 2-cent charge due to managementchanges. That 43-cent figure, matching the consensusestimate of analysts surveyed by Thomson First Call,is up from the year-ago $660 million, or 37 cents ashare.

Revenue of $6.84 billion edged past the consensusof $6.81 billion for the quarter, and was up 7% fromthe second quarter of 2003.

Operating income grew 10% to $1.45 billion,matching the First Call number.

The company reiterated full-year guidance forgrowth in revenue, operating income and earnings pershare, though it specified that guidance excludes thenew severance charges.

For the full year, Viacom has been forecastingrevenue growth of 5% to 7%, operating income growth of12% to 14% and earnings per share growth of 13% to15%. Those numbers exclude a 2003 noncash chargerelated to Blockbuster and a 2004 federal tax auditbenefit, and are clouded by the comingBlockbuster split-off.

Shares in Viacom, which have slid over the pastyear, rose 46 cents Thursday to trade at $34.06.Viacom's stock has been performing noticeably worsethan big-media brethren Time Warner ( TWX) and Disney ( DIS).

"Once again our results were led by exceptionalperformances in our cable networks and televisionsegments, which account for over 70% of the company'soperating income," CEO Redstone said in a statement."We ... experienced strong increases in the televisionupfront advertising process, locking in higher ratesand increased dollars, a performance that shouldbenefit Viacom through at least the third quarter of2005. The second quarter also benefited from top-lineincreases in every business unit, paced by an 11%increase in overall advertising revenue."

In the wake of Microsoft's ( MSFT) announcement of a special one-time dividend, plus adividend increase, Redstone indicated on a Thursdaymorning conference call with analysts that hispreferred method for returning value to shareholderswas via a stock buyback. "We are not considering aone-time dividend," he said, nor is the companyconsidering an increase in its regular dividend payoutat this time.

Viacom's cable networks segment showed operatingincome growth of 23% to $608 million, reflecting suchfactors as 26% advertising growth and lowerrestructuring charges than those posted a year ago.

Operating income for the television segment, including theCBS and UPN networks and stations, grew 35% to $528million, on 11% revenue growth.

Radio stations revenue grew 2%, while operatingincome of $267 million remained flat. Karmazin,according to Viacom, left the company partly out offrustration with the performance of the radio segment.

Like radio giant Clear Channel ( CCU), which earlier this week announcedplans to cut back on advertising clutter, new Viacomco-president Les Moonves indicated Thursday that thecompany was cutting ad inventory while increasingprices at its own radio stations, on astation-by-station, market-by-market basis. Theresults have been positive, he said, but couldn't quantify them or predict their effect on thedivision's results.

Entertainment revenue, which includes ParamountPictures, theme parks and other properties, saw a 6%decline in operating income to $68 million. Featuresrevenue fell from the second quarter of 2003.

Following up on Redstone's statements earlier thisyear that Paramount Pictures would be spending moremoney, the CEO said Thursday that the money availableto the movie studio had increased "modestly." Thestudio wouldn't, however, be spending the $200 millionto $300 million he said that other studios werespending on some major releases. (For purposes ofillustration, Sony's ( SNE) Spider-Man 2, one of the biggest hits of thesummer, cost $275 million to produce and market,reports The Guardian.)

Co-president Tom Freston said that the studio wasabout to unveil several major deals with producers.

Under its new regime, executives on the Thursdaycall indicated there would be increased cooperationamong Viacom's different operations. Freston, forexample, said there would be extra advertising andpromotional "oomph" for certain movie releases amongViacom's other properties.

Operating income at Blockbuster, the videoretailer Viacom is planning to spin off in an exchangeoffer, dropped 28% to $76 million. Worldwide same-store revenue fell 4.4%.

Viacom hasn't yet set the exact terms under whichshareholders will be able to trade Viacom stock forBlockbuster stock.

While the company said it is interested inexpanding its Internet properties -- a philosophyreflected in its recentbid for all of affiliate SportsLine.com ( SPLN) --Viacom indicated that current Internet revenue wasless than $100 million annually.

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