Viacom Reports Q3 Loss, Announces $8 Billion Stock Buyback Program

Oct 28, 2004  •  Post A Comment

A charge tied to the spinoff of Blockbuster Video swung Sumner Redstone’s Viacom to a third-quarter loss, the company announced Thursday. Viacom also announced an aggressive $8 billion stock buyback program.

The company, whose assets include CBS and MTV, reported a third-quarter loss of $487.6 million, or 28 cents a share, compared with a year-earlier profit of $699.6 million, or 40 cents a share. The 2004 quarter included a charge of $1.5 billion related to Viacom’s unloading its 80 percent-plus stake in Blockbuster.

Revenue rose 4 percent to $5.5 billion, driven by revenue gains at Viacom’s broadcast and cable networks.

The cable properties booked a 14 percent surge in revenue, thanks to a 17 percent increase in advertising revenue at MTV Networks. Affiliate-fee revenue rose 8 percent, thanks to MTV and Black Entertainment Television, both of which offset a slight decline in affiliate-fee revenue at Showtime. Ancillary revenue soared 33 percent in the quarter, thanks to higher consumer product revenues at Nickelodeon and strong DVD sales of “Chappelle’s Show.” Operating profit at the cable networks rose 13 percent to $690.6 million.

Viacom’s broadcast properties reported a 5 percent increase in revenue to $2 billion, driven by 4 percent advertising revenue growth at CBS and UPN and 3 percent advertising revenue growth at Viacom’s owned-and-operated stations. Television licensing fees fell 1 percent due to the availability of fewer syndication

titles in the quarter.

Meanwhile, Viacom announced its plans to buy back $8 billion worth of stock in a bid to boost Viacom’s shares. Merrill Lynch analyst Jessica Reif Cohen projected that at $35 a share, Viacom could reduce by 13 percent the number of shares outstanding.