Viacom Profit Up 48% on Rising Ad Sales

Viacom Inc., the media company that is acquiring CBS Corp., said fourth-quarter profit rose 48%, boosted by higher advertising sales at the MTV, VH1 and Nickelodeon cable-television channels.

Net income rose to $133.1 million, or 19 cents a share, from $89.8 million, or 15 cents, in the year-ago period. That beat the 14-cent average estimate of analysts polled by First Call/Thomson Financial.

Revenue climbed 6.8% to $3.57 billion. Higher audience ratings and rising ad rates combined to boost profit at Viacom’s cable networks, the business that generates much of Viacom’s earnings. The film group’s results rose because of hit movies such as “Double Jeopardy,” while revenue increased at the Blockbuster video chain as it added new stores.

“The growth driver is the MTV networks group,” said Ed Hatch, an analyst at SG Cowen. “Advertising demand was strong in the fourth quarter.”

The New York-based company’s cash flow rose 18% to $595.2 million from $502.4 million a year ago. Excluding investments in online businesses, Viacom said cash flow climbed 24% to $626 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 such as amortization.

Despite the report, Viacom’s stock price fell $3.50, to $55.75 a share on the New York Stock Exchange.The stock has risen about 31% since the CBS acquisition was announced in September, though analysts could not explain the decline this week of most of the media stocks.

At the MTV Networks division, which includes the MTV, VH1 and Nickelodeon cable-TV channels, cash flow climbed 19% to $347 million because of higher advertising and subscriber revenue. MTV Networks’ revenue rose 14% to $925 million.

Cash flow at the filmed-entertainment operations, which includes the Paramount Pictures movie studio, jumped 32% to $130 million. The division’s films this quarter included “Sleepy Hollow” and “Double Jeopardy.”

Blockbuster, the world’s largest video-rental chain, generated $146 million in cash flow, up 14%, excluding spending on online ventures, which includes Blockbuster.com. Including those investments, Blockbuster’s cash flow rose 10% to $141 million.

In the year-ago quarter, Viacom recorded a loss from the early retirement of debt of $74.7 million. It also had income from discontinued operations of $3.4 million. The items made net income $18.5 million, or 5 cents a share.

The discontinued operations include Viacom’s former educational and professional publishing unit and Blockbuster Music, which were sold in 1998.