Viacom Beats Forecasts as Ad Sales Boost Profit 11%

Viacom Inc. said profit rose a much-better-than-expected 11% in the latest quarter, led by higher advertising sales at its cable-television networks such as MTV.

The media company also said it received antitrust clearance for the planned acquisition of CBS Corp. Justice Department officials weren’t immediately available for comment.

Viacom’s net income was $76 million, or 11 cents a share, in its first quarter, compared with profit from operations of $68.4 million, or 8 cents, a year ago. Sales rose 2.5% to $3.03 billion.

The New York-based company was expected to earn 6 cents a share, the average estimate of analysts surveyed by First Call/Thomson Financial.

Higher audience ratings and ad sales boosted Viacom’s cable channels, which generate about half of the company’s cash flow.

Ad sales rose 20% at MTV Networks. The entertainment unit posted an unexpected 5% gain in cash flow, boosted by higher syndication revenue and video sales of movies such as “Runaway Bride.”

Viacom’s total cash flow rose 2% to $484.2 million. The results helped bolster investor expectations for the combined Viacom and CBS, to be led by Sumner Redstone and Mel Karmazin.

“Nobody was looking for anything that strong,” said Marvin Roffman of Roffman Miller Associates, which owns shares of Viacom. “The next step right now is to accomplish the merger.”

Viacom’s widely traded Class B shares rose $2.69 to close at $54.63 on the New York Stock Exchange.

The stock has risen about 16% since the proposed CBS acquisition was announced in early September. The companies expect the purchase, valued at $45 billion, to close sometime this quarter.

“We are off to a great start. This will be a watershed year for Viacom,” Redstone, the company’s chairman and chief executive, said on a conference call with analysts.

At a Glance

Other earnings, excluding one-time gains or charges unless noted, include:

* Anheuser-Busch Cos. said first-quarter earnings rose 9.8% to $350.3 million, or 76 cents a share, 2 cents better than forecasts, on a 4.7% rise in sales to $2.81 billion. The world’s largest brewer benefited from raising its prices.

* B.F. Goodrich Co., the largest U.S. maker of aircraft-landing gear, said first-quarter profit fell 3.6% to $89.5 million, or 81 cents a share, but beat estimates of 77 cents. Sales fell 2.1% to $1.38 billion. Profit fell 2.7% in the company’s aerospace business as sales of parts for new planes decreased. Goodrich was affected by declining production at Boeing Co.

* Interpublic Group of Cos., the world’s second-largest advertising company, said first-quarter profit grew 27% to $57.1 million, or 20 cents a share, better than the 18 cents analysts expected, on strength of new businesses and cost control. Sales rose 2% to $1.09 billion

* Jones Apparel Group Inc., maker of Jones New York and Polo Jeans Co. clothing, said first-quarter earnings rose 30% to $70.6 million, or 58 cents a share, 3 cents better than forecasts, as revenue climbed 87% to $1.08 billion.

* MediaOne Group Inc., the cable-television company being acquired by AT&T; Corp., reported a loss from continuing operations of $174 million, or 27 cents a share, compared with a loss of $175 million, or 31 cents, a year earlier. Sales rose 6% to $706 million from $665 million. Subscriptions to the company’s high-speed Internet service more than doubled to 278,000 and phone customers rose more than fivefold to 94,000. Cash flow rose 10% to $261 million.

* Oxford Health Plans Inc. said first-quarter earnings climbed eightfold, far exceeding expectations, to $28.8 million, or 34 cents a share, from $3.2 million, or 4 cents, a year ago. The health insurer benefited from leaving less-profitable markets and controlling costs. Revenue declined 3.7% to $1.02 billion. The results beat analysts’ estimates of 26 cents. The company also said it expects to earn $1.50 a share in 2000, well above analysts’ expectations of $1.34. The news sent Oxford Health shares up $3.44, or 22%, to $19.31 on Nasdaq.

* Reader’s Digest Assn. Inc. said third-quarter earnings rose 25% to $31.3 million, or 29 cents a share, 2 cents better than forecasts, as revenue rose 2.5% to $620.4 million.

* Sara Lee Corp.’s fiscal third-quarter earnings rose 6.9% to $262 million, or 29 cents a share, meeting forecasts. The maker of Hanes clothing, L’eggs hosiery and its namesake baked goods said sales rose 4.7% to $4.88 billion. Sales and profit rose in the food service, clothing, household products and coffee and tea units.

* Scotts Co. said its fiscal second-quarter earnings rose 16% to $63.6 million, or $2.16 a share, well beyond analysts’ expectations of $1.96 a share, on a 20% jump in North American sales of its Ortho garden pesticides and Miracle-Gro plant fertilizers. Total sales grew 14% to $720.7 million.

* Tricon Global Restaurants Inc., the parent of Pizza Hut, Taco Bell and KFC, posted a 20% increase in first-quarter operating profit to $96.4 million, or 64 cents a share, driven by growth overseas and cost-cutting measures. The results exceeded analysts’ consensus estimates of 55 cents. Revenue, which includes company sales and franchise fees, fell 12% to $1.6 billion from $1.81 billion because Tricon sold more restaurants to its franchisees.