NEW YORK — Viacom Inc. swung to a profit in the second quarter, paced by improved cash flow in its cable networks, television and entertainment segments.
Viacom on Thursday reported a profit of $16.7 million, or one cent a share, compared with a loss of $495.6 million, or 41 cents a share, in the year-earlier period.
Analysts surveyed by Thomson Financial/First Call had expected the media and entertainment giant to post break-even per-share results.
The owner of the CBS and UPN television networks; the MTV, Black Entertainment Television, Showtime, and Comedy Central cable channels; 35 U.S. television stations; Paramount Pictures film studio and Blockbuster video stores recorded revenue of nearly $5.72 billion, up 18% from $4.85 billion a year earlier.
“Viacom’s second quarter results exceeded expectations in a very difficult operating environment and we continued to outperform the competition and pick up market share in every major segment,” Mel Karmazin, president and chief operating officer of Viacom, said in a prepared statement.
The company said its second-quarter results were led by double-digit increases in earnings before interest, taxes, depreciation and amortization, or Ebitda, in its cable networks, television and entertainment segments.
Reported Ebitda in the period rose to $1.36 billion, up from $273 million, including merger-related charges of $698 million, in last year’s second quarter. Reported free cash flow surged 534% from the year-earlier quarter, and after-tax cash flow jumped 211%.
Pro forma free cash flow for the second quarter rose 33% to $936 million, or 52 cents a share, from $706 million, or 39 cents a share. Pro forma after-tax cash flow increased 15% to $1.04 billion, or 58 cents a share, from $904 million, or 50 cents a diluted share, a year earlier.
“Overcoming the significant challenges created by the economic slowdown, our Cable Networks reported 25% pro forma EBITDA growth, including double-digit increases at MTV Networks, BET and Showtime. Our content businesses, which account for 50% of our annual revenues, also excelled in the quarter,” Mr. Karmazin noted.
Viacom said CBS posted significant sales gains and its entertainment operations, including Paramount, reported double-digit Ebitda growth.
Ebitda at the cable networks operations rose 36% to $389 million from $286 million, while pro forma Ebitda increased 25% to $390 million. Reported and pro forma Ebitda for the company’s television operations came to $361 million, up 119% and 16%, respectively.
The entertainment segment’s reported Ebitda increased 15% to $132 million. Blockbuster’s reported Ebitda was up 5% to $118 million.
The Infinity Broadcasting division also made major Ebitda contributions in the quarter, “despite challenges created by the steep fall-off of advertising in the technology sector which contributed to an unusually robust advertising market last year,” Viacom said.
The solid second-quarter results “confirm our belief that Viacom’s Ebitda growth rate will improve rapidly and significantly compared with current results as the economy strengthens,” Mr. Karmazin said.
For the second half of 2001, “the company believes it can achieve Ebitda growth generally in line with the growth rate achieved in the first half of the year assuming the continuation of the current economic climate,” Viacom said.
Copyright (c) 2001 Dow Jones & Company, Inc.
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