Updated from 7:10 a.m. EDT
shares rose 3% Thursday after the company pleasantly surprised analysts with better-than-expected revenue and earnings.
First-quarter advertising sales at the media andentertainment conglomerate grew by 21% overyear-earlier results. Revenue growth was strongest attwo key divisions, with cable networks up 21% andtelevision up 18%.
The company reiterated its guidance for full 2004financial performance.
"I'm extraordinarily optimistic about theremainder of '04," Viacom President Mel Karmazin saidon a conferent call with analysts Thursday morning.
For the first quarter ended March 31, Viacompostednet income of $711 million,or 41 cents per share, up from $443 million, or 25cents per share, one year earlier. The 2004 numberincludes the recognition of a tax benefit of $141million stemming from the resolution of a tax auditcovering 1997 through part of 2000; excluding thatbenefit, Viacom earned $570 million, or 33 cents pershare. The Thomson First Call consensus forecast wasfor 31 cents ashare.
The New York company reported $6.77 billion inrevenue, up 12% from the$6.05 billion reported in the first quarter of 2003and ahead of the consensus figureof $6.52 billion.
Operating income was up 20% to $1.18 billion,better than analysts' expectations of $1.08 billion.
At the company's cablenetworks, where operatingincome grew 24%, the $1.4 billion in first-quarterrevenue was fueled by higher advertising fees andancillary revenue. Cable networks ad sales grew by33%, led by 35% growth at MTV Networks and 16% at BET.The licensing of Nickelodeon home video and consumerproducts pushed ancillary revenue up 25%.
TV revenue, which grew to $2.3 billion, was pushedby broadcasts of the Super Bowl, the NCAA Men'sBasketball Championship and CBS primetime.
The dependably bullish Karmazin had encouragingwords about the upfront selling season that isunfolding, when TV networks sell advertising time forthe season starting in the approaching fall.
With CBS more than halfway through the upfrontmarket for children's television programming, Karmazinsaid Viacom has "double-digit" pricing increases.Estimates are that the total volume of the cableupfront market will increase from 8% to 20% over lastyear, said Karmazin, and it's Viacom's belief that thegrowth will be at the high end of that range.
Revenue at the company's radio division, whichdisappointed Wall Street over the past year, grew 3%to$455 million. On the call, Karmazin predicted secondquarter revenue growth of at least 5% and revenuegrowth in the third quarter -- when seasonal volumepicks up -- of 7%. "There's no advertiser who'scanceling radio to go anywhere else," Karmazin said.
Karmazin spent part of the time on the calltalking about the long-term prospects for onlineadvertising, a market in which the companyparticipates through its operation of sites such asNick.com and MTV.com. Though the company doesn't breakout its online business separately, that reporting maychange, Karmazin suggested.
Asked about expected long-term growth prospectsfor different advertising media, Karmazin said hethought all of the areas in which Viacom operated --starting with online, cable, local TV and TV networks-- would grow faster than advertising in general.Yellow pages and newspaper advertising -- businessesin which Viacom doesn't participate -- will have "bigproblems," he said.
Karmazin criticized the Federal CommunicationsCommission's current crackdown on indecency, sayingthe government was on a slippery slope of regulatingspeech in the media.
For the full year, Viacom reiterated revenuegrowth inthe range of 5% to 7%, operating income up in therange of 12% to 14%, and earnings per share up between13% and 15%. Those growth numbers exclude a $1.3billion charge last year related to Viacom's
subsidiary, which thecompany hopes to spin off later this year.
Analysts currently expect $28.23 billion inrevenue for 2004, $6.6 billion of operating incomebefore depreciation and amortization, $5.55 billion inoperating income, and earnings per share of $1.63.
Viacom's shares rose $1.11 Thursday to trade at$42.09. Shares have bounced between $36.35 and $49.75over the past year.