Radio Drives Huge Loss at Viacom

The New York-based media giant, which also owns CBS, MTV and Paramount Pictures, posted an $18.4-billion loss after taking an $18-billion charge against fourth-quarter 2004 earnings.

The bulk of the charge -- $10.9 billion -- was attributed to Viacom's radio holdings, while $7.1 billion was related to its outdoor advertising business.

The write-down came on the heels of a $1.5-billion charge against earnings that Viacom reported in the third quarter. That loss was associated with the company's spin-off of the video rental chain Blockbuster Inc.

Viacom, the nation's second-largest radio broadcaster, is the latest company to report significant radio-related losses. In 2002, the biggest U.S. radio company, Clear Channel Communications Inc., posted a loss of $16.9 billion after writing down the value of assets it acquired during a buying spree.

Analysts said Thursday that the Viacom write-down wasn't surprising, given that radio advertising, which accounts for 15% of the company's revenue and profit, had been sluggish. Across the board, broadcasters have faced increased competition for listeners from satellite radio, the Internet and digital music players such as Apple Computer Inc.'s iPod.

Bishop Cheen, an equity analyst for Wachovia Securities Inc. in Charlotte, N.C., said broadcasters also were wrestling with continued fallout from a media buying binge in the late 1990s during the dot-com boom.

"Everything in media peaked in 2002," Cheen said. "That's how these properties were carried -- at 2002 prices. Now, it's dot-gone and [the value of] radio has come back to earth."

That's not to say that radio is a losing business. Nationwide, radio revenues are growing in the single digits. That's less than the double-digit growth in the late 1990s and 2000, but profit margins are still healthy.

Leslie Moonves, co-president of Viacom, said in a conference call with investors that getting the radio business "back on a growth path" was a top priority.

"We're being realistic about growth expectations for radio in the current environment," Moonves said. "It still produces a tremendous amount of cash for us."