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Viacom Downplays $227-Million Loss

Earnings: Company blames closure of computer game unit and music stores for fourth-quarter drop.

March 05, 1997|From Associated Press

NEW YORK — Viacom Inc., the owner of Paramount Pictures and MTV, reported a $227.4-million loss for the fourth quarter because of costs associated with its decision to exit the computer game business.

The company, which also owns the VH-1 cable network, Blockbuster Entertainment and Simon & Schuster publishing, said Tuesday that its loss came to 68 cents a share. That compares with a profit of $4.5 million, which equals a loss of 3 cents a share after preferred stock dividends, in the same period a year earlier.

Revenue rose to $3.41 billion from $2.80 billion.

Viacom reported that a common measure of cash flow known as EBITDA, which stands for earnings before interest, taxes, depreciation and amortization, rose 10% in the quarter to $477.6 million.

"We made significant operational progress in the year, and benefited from superior growth in such major units as MTV Networks, Paramount's motion picture and television operations, Simon & Schuster and Showtime Networks," said Chairman and Chief Executive Sumner Redstone.

Excluding discontinued operations, which include the game business, Viacom's radio stations and its cable business, the company earned $17.2 million, or 1 cent a share. Wall Street had been expecting a loss of about 12 cents a share on that basis.

Viacom's Class B shares closed 75 cents higher at $37.25 on the American Stock Exchange.

Included in the net loss was a $98 million charge related to the closure of about 50 Blockbuster Music stores. Also adding to the fourth-quarter decline were losses of $245 million related to Virgin Interactive Entertainment, a unit of Viacom's 75%-owned Spelling Entertainment Group. Spelling intends to spin off the computer game company this year.

Viacom's EBITDA from its networks and broadcasting segment rose 40% in the quarter, with particular help from advertising gains driven by ratings improvements at Nickelodeon.

Its entertainment unit saw EBITDA jump 97% on the strong foreign theatrical and domestic video performance of "Mission: Impossible" and the domestic theatrical releases of "Star Trek: First Contact," "The First Wives Club" and "Beavis and Butt-Head Do America."

Viacom's video and theme parks EBITDA was down 52% on the Blockbuster charge but publishing was up 20% on strong sales of textbooks and educational technology, international products and strength from Macmillan Publishing USA, which focuses on computer books.

For the full year, Viacom posted a profit of $1.25 billion, or $3.23 a share, compared with $222.5 million, or 43 cents a share, in 1995. Revenue rose to $12.08 billion from $10.92 billion.

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