MTV Restructuring Trims Viacom Profit

May 10, 2007  •  Post A Comment

Restructuring at MTV Networks resulted in a 36 percent decline in first quarter net income for Viacom.
MTV has fired about 500 people as it shifted more resources into digital media under new CEO Philippe Dauman, who replace Tom Freston when chairman Sumner Redstone decided the company was moving too slowly in new media.
Viacom posted net income of $202.9 million, or 29 cents a share, down from $317.2 million, or 43 cents a share. Revenue rose 16 percent to $2.7 billion.
Operating income in Viacom’s media networks business fell because of restructuring charges of $56 million. Programming expenses also rose. Corporate expenses were also up because of incremental stock-based compensation expenses of $11 million.
Analyst Spencer Wang of Bear Stearns said the restructuring charge had been expected, and that otherwise, Viacom’s results were sold. Revenues and earning were above most estimates.
“Cable network trends were healthy in the quarter,” he said, estimating that domestic advertising gains were larger than expected, although “spending at cable networks muted the revenue upside.”
Mr. Dauman said the company was moving quickly to increase the efficiency of its domestic and international operations and to invest in content and digital initiatives.
“Our first-quarter results reflect our focused agenda to fully leverage creative and operating excellence across all of our businesses,” Mr. Dauman said in a statement Thursday.
On the digital front, the company made deals with distributors such as Joost and sued Google’s YouTube video-sharing site for unauthorized use of Viacom content.
(Editor: Baumann)

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