Viacom Reports a Loss

Despite a mixed third-quarter performance, Viacom Inc.’s shares jumped Thursday after the entertainment giant announced an $8-billion stock buyback and raised its dividend.

Viacom, the owner of MTV, Nickelodeon, CBS and Paramount Pictures, posted a net loss of $487.6 million, or 28 cents a share, for the quarter. It earned $699.6 million, or 40 cents, in the same period last year.

Revenue in the quarter was $5.48 billion, up 4% from a year earlier.

The loss resulted from a $1.5-billion write-down of the value of Blockbuster Inc., which was split off from Viacom this month as planned. Viacom took an additional $1.3-billion charge early this year to account for Blockbuster’s falling value. The video rental chain has struggled in the face of DVD price wars and competition from Netflix Inc., a rent-by-mail service.

Excluding the latest one-time Blockbuster charge, earnings from continuing operations rose 12%, to $722.6 million, in the quarter, driven by cable, television and outdoor advertising sales.

Revenue at the Paramount movie studio and Viacom’s book division fell 1%.

But the weakest business in Viacom’s portfolio continued to be radio. Its earnings dropped 17%, while revenue declined 4%.

Leslie Moonves, who is co-president of Viacom and is in charge of the radio division, said he had recently launched a pilot program at nine of the company’s 183 radio stations to invest more in programming and marketing. The program, he said, is already showing results.

Moonves also played down the loss of its biggest radio star, Howard Stern, who this month signed a five-year deal to move to Sirius Satellite Radio Inc., beginning in 2006.

“Our next deal with him might not have been cash positive,” Moonves said during a conference call with investors.

He promised to replace Stern with more-profitable programming.

The company’s buyback program was larger than most analysts expected. Viacom also increased its quarterly dividend to 7 cents a share, up from 6 cents a share.

Viacom’s class B shares jumped $1.02 to $36 on the New York Stock Exchange on Thursday. The stock is down 19% this year.