Ad Strength Boosts Viacom’s Profit

Viacom Inc., the world’s fifth-largest media company, said its earnings per share in the third quarter soared 120%, led by higher advertising revenue at its MTV and VH1 cable TV channels.

Third-quarter profit from operations, excluding charges, rose to $159.6 million, or 22 cents a share, from $86.4 million, or 10 cents, in the year-ago period. That beat the average estimate of 16 cents a share by analysts polled by First Call Corp. Revenue rose 1.2% to $3.33 billion.

Viacom’s stable of cable TV networks benefited from higher ad sales worldwide, an offshoot of strong audience ratings. Its Blockbuster video store chain got a boost from adding new stores. These gains helped temper a decline at Paramount Pictures, where strong releases, such as “Runaway Bride,” were no match, comparatively, for last year’s home video release of the hit “Titanic.”

“MTV, VH1, Nickelodeon and the other cable networks are the major beneficiaries of one of the most robust ad environments we’ve ever seen,” said Jefferies & Co. analyst Fred Moran.

Class B shares in New York-based Viacom rose 6 cents to close at $40.88 on the New York Stock Exchange. The stock is up about 10% this year.

Viacom’s cash flow, before a charge, rose 1.7% to $610.2 million from $599.8 million. Cash flow--or earnings before interest, taxes, depreciation and amortization--is a key measure of indebted companies because it focuses on the performance of the underlying businesses and excludes interest payments and noncash charges.

Interest expense fell by 30% to $110.5 million because of Viacom’s improved credit rating and lower debt load. Revenue at the filmed-entertainment division, which includes Paramount Pictures studio, fell 7.6% to $1.17 billion, while cash flow fell 23% to $166 million because of tough comparisons to last year’s third quarter, when “Titanic” was released on home video.

The “Titanic” video accounted for about half of last year’s cash flow for the division. Viacom said all five of the pictures it had in general release in the third quarter made money.

“The [film] numbers are amazing considering they had ‘Titanic’ last year,” said Jessica Reif Cohen, an analyst at Merrill Lynch & Co.

Viacom’s Blockbuster chain of home video stores boosted cash flow 25% to $129.9 million as it opened new stores, and sales at stores open at least a year topped forecasts, rising 5.7%. Revenue rose 13% to $1.11 billion.