MTV, B'buster fuel rev, profit growth
NEW YORK — Viacom Inc. posted strong gains in second-quarter earnings Monday despite a tough comparison in film after last year’s huge cash injection from “Titanic.”
Fueled mainly by MTV Networks, Blockbuster Video and publishing, Viacom’s net income grew to $59 million, or 9¢ a share from a loss of $281 million, or 41¢ a share, the year earlier. Revenue rose 8% to $3 billion.
The previous quarter included a one-time charge at Blockbuster of $424 million. That unit is set to go public later this summer. Viacom unveiled some details of the planned initial public offering Monday as well as revealing that Blockbuster’s market share had advanced to 31% in the latest second quarter from 26% in the fourth quarter of 1998.
In a conference call with analysts, Viacom chairman and CEO Sumner Redstone once again trumpeted the company’s cable networks, which saw an 18% jump in revenue to $704 million.
Cash flow (earnings before interest, taxes, depreciation and amortization) jumped 25% to $219 million as MTV and VH1 posted double-digit ratings increases. The fastest growth is still coming from the networks’ international business, which contributes about $50 million in revenue.
Redstone said MTV Networks’ 10-year affiliation agreement with AT&T Corp., the nation’s biggest cable operator, will pump out “hundreds of millions of dollars” in fees to Viacom.
Showtime Networks pay TV segment added 3.4 million subscribers for a total of 22.3 million, and boosted revenue by 8%. Its direct broadcast satellite growth was offset by higher programming and marketing expenses.
Blockbuster revenue rose 17% to $1 billion as domestic same-store rental revs grew 13%. Cash flow landed in the black at $105 million from a loss of $359 million a year earlier.
Redstone said the latest second quarter was the first to reflect the full effect of Blockbuster’s revenue sharing agreements with major studios. The company also opened 505 new stores in the past year for a worldwide total of 6,658 at the end of June.
Entertainment — the bulk of which is film and television production and exhibition — revenue dipped 2% to $1 billion, and cash flow gained 8% to $166 million in what Redstone termed a “stellar” quarter given last year’s hefty theatrical results from “Titanic” along with “The Truman Show” and “Deep Impact.”
The latest quarter was buttressed by the strong homevid performance of “The Rugrats Movie,” “Star Trek: Insurrection,” “Saving Private Ryan” and “The Truman Show” as well as the theatrical release of “The General’s Daughter.” The positive impact of that film, Redstone said, will be even more evident in third quarter results.
Spelling Entertainment, which is now 100% owned by Viacom, saw revenue and cash flow grow on higher license fees for continuing series and for firstrun syndication shows like “Judge Judy.” Viacom completed the acquisition of Spelling last month.
The company didn’t break out figures for its struggling UPN television netlet, although Redstone and other Viacom execs predicted a turnaround beginning with the coming fall season.
In publishing, Simon & Schuster’s cash flow soared 76% to $17 million and revenue rose 19% to $146 million on sharply higher sales in the trade and children’s divisions.
Viacom is exploring alliances in the sector, Redstone said, but wouldn’t comment on previous reports that one is in the works with Time Warner.
Theme park revenue dipped 2%, while revenue from online ventures increased 108% from a small base to $5.2 million.
Redstone also stressed his company’s overseas expansion in exhibition as it continues to build new movie theaters, many in partnership with Seagram Co.’s Universal Studios.
Viacom shares slipped 56¢ or 1.26%, to $44.19 in a sluggish market.