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Viacom's 4th-Quarter Profit Declines on Acquisition Costs

February 15, 2001|From Reuters

NEW YORK — Media giant Viacom Inc. reported lower fourth-quarter profit Wednesday as a result of acquisition costs and other charges, although cash flow and revenue rose on the back of its purchase of the CBS television network and on cable properties such as MTV and Showtime.

The company's net income totaled $30.4 million, or 2 cents a share, including amortization costs from the acquisition of CBS in May and a $99-million pretax charge from the decline in value of its Internet investment portfolio. The year-earlier profit was $133.1 million, or 19 cents a share.

Excluding the charge, fourth-quarter earnings were $76 million, or 5 cents a share. The Wall Street consensus estimate compiled by First Call/Thomson Financial was 3 cents a share.

Pro forma after-tax cash flow, a widely watched indicator for media companies that excludes depreciation amortization and other one-time charges, totaled $852 million, or 57 cents a share, compared with $600 million, or 40 cents, a year earlier. These numbers assume the same portfolio of assets, such as CBS, in both years.

Revenue rose 78% to $6.36 billion from $3.57 billion and increased 5% on a pro forma basis.

Earnings before interest, taxes, depreciation and amortization, or EBITDA, totaled $1.36 billion, compared with $595 million in fourth quarter 1999. Pro forma EBITDA rose 17%.

The company said it expects EBITDA to grow 20% to $6.2 billion in 2001, although it warned first-quarter growth will be modest compared with a year earlier. Viacom Class A shares rose 32 cents to close at $54.03 on the New York Stock Exchange.

Viacom said its cable networks unit, which includes MTV, VH1, Nickelodeon and Showtime, showed a 16% increase in EBITDA on a 11% increase in revenue on a pro forma basis in the fourth quarter, helped by increases in advertising.

The entertainment segment, which includes Paramount Pictures, saw its EBITDA rise fivefold on a 2% increase in revenue.

The television unit, which includes CBS, the struggling UPN network and the company's production unit, showed a 14% jump in pro forma EBITDA, despite a 4% decline in revenue.

With its hit show "Survivor," CBS is seeking in 2001 to take market share away from traditional leader NBC, which boasts the show "Friends" in the important Thursday night lineup.

Infinity Broadcasting, in which Viacom owns a 64% stake, recorded a 10% increase in EBITDA on a 6% jump in revenue.

MGM Profit Down

Metro-Goldwyn-Mayer Inc., owner of one of the world's biggest film libraries, said fourth-quarter profit fell 18% because of a lack of major movie releases in the period.

Net income fell to $12.4 million, or 6 cents a share, from $15.2 million, or 8 cents, a year earlier, the company said in a statement distributed by Business Wire.

Revenue fell 22% to $292.2 million from $372.2 million. Earnings before interest, taxes, depreciation and amortization fell 22% to $37.1 million from $47.7 million.

MGM, which is controlled by billionaire investor Kirk Kerkorian, released only one new film in the U.S. in the quarter, dragging down earnings. MGM had profited a year ago from the success of the latest James Bond movie, "The World Is Not Enough."

The lack of movie revenue was offset partly by higher-than-expected home video sales.

The Santa Monica-based company was expected to earn 1 cent a share, the average estimate compiled by First Call/Thomson Financial. MGM shares fell 37 cents to close at $19.73 on the NYSE.

Cablevision Posts Profit

BETHPAGE, N.Y.--Cablevision Systems Corp., the New York region's largest cable operator, had a fourth-quarter profit as the company sold an Ohio system and added customers for high-speed Internet service.

Net income was $556.6 million, or $3.13 a share, contrasted with a loss of $216.1 million, or $1.27, a year ago. Sales rose 9.1% to $1.18 billion from $1.08 billion, excluding three cable systems that were sold.

In the last year, Cablevision sold systems in Boston, Ohio and Michigan for about $2.7 billion to focus on the New York market, where it had 2.8 million customers Dec. 31, and sports and entertainment businesses. Customers for Internet service rose more than fourfold.

Results include a fourth-quarter gain of $1.08 billion for the Ohio sale to Adelphia Communications Corp., said spokesman Charlie Schueler. The Bethpage-based company didn't provide per-share profit excluding the gain and didn't say whether the gain was before or after taxes.

Cablevision shares fell $6.25 to close at $77 on the NYSE. The company was forecast to have $1.2 billion in revenue by Merrill Lynch & Co. analyst Jessica Reif Cohen.

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