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Viacom Earnings Soar; Seagram Sees Decline

Results: 'Titanic' video, cable and Blockbuster's turnaround all help Viacom. Asia hurts Seagram beverage sales.

November 05, 1998|JAMES BATES | TIMES STAFF WRITER

Viacom Inc.'s earnings from continuing operations soared in the third quarter, thanks to video sales of "Titanic," continued strength of its cable networks such as MTV, a strong year from Paramount Pictures and the ongoing turnaround at its Blockbuster Video unit.

Net income in the quarter ended Sept. 30 dropped 68% to $138.4 million, or 34 cents a share.

But that drop is entirely because the entertainment giant's year-earlier results were boosted by a large gain from sale of its radio operations. Viacom's revenue was up 14% in the quarter to $4 billion.

Operating earnings soared to $157 million from $27 million a year ago, or 39 cents a share.

Separately, beverage and entertainment giant Seagram Co. said its fiscal first-quarter earnings from continuing operations dropped 18% to $95 million, or 27 cents a share, slightly above Wall Street's expectations. Seagram was mostly hurt by soft results in its spirits and wine business, which has been under pressure because of the ailing Asian economy, but it also suffered from the continued bad streak its movies have suffered at the box office.

At Viacom, Blockbuster continues its strong turnaround. Viacom, which believes Blockbuster drags down its stock price, is expected to spin off the video store chain next year. Another potential candidate to be spun off is its 80% stake in Spelling Entertainment Group.

Viacom Chairman Sumner Redstone has been working feverishly to revamp the company's balance sheet, which had been loaded with debt after the acquisition of Paramount Communications and Blockbuster. He is selling most of publisher Simon & Schuster to Britain's Pearson for $4.6 billion.

Analysts have been cheered by Redstone's efforts to get Viacom's financial house in order.

"They're doing all the right things," said Jeffrey Logsdon, entertainment analyst at Seidler Cos. in Los Angeles.

Overall, Seagram earned $1.16 billion, or $3.33 a share, in the quarter due to a gain from the sale of its Tropicana juice business to PepsiCo Inc.

Seagram said attributed revenue, which includes results from companies in which it has an equity stake, rose 6% to $2.79 billion, while cash flow for those operations climbed 13% to $270 million. It credited improved performances by Universal's domestic music labels and the performance of USA Networks. They helped offset continuing problems at Universal's movie unit.

Seagram is buying music giant PolyGram for $10.4 billion, and it formally launched its offer for outstanding shares in the Dutch-controlled company.

Seagram shares rose 69 cents to close at $34.06 on the New York Stock Exchange; Viacom's Class B shares fell 75 cents to close at $62.75 on the American Stock Exchange.

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