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Ad Rebound a 'Shore' Thing for Viacom

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Viacom on Thursday was the latest media conglomerate to trumpet an improving advertising marketplace, reporting a tidy increase in second quarter sponsor commitments at its cable networks division.
 
For the three month period ended June 30, the Viacom cable nets––the clutch of high-gloss brands that includes MTV, VH1, Comedy Central, Nickelodeon and BET––boosted overall revenue 6 percent versus Q2 2009, with a total haul of $2.09 billion. Stateside revenue accounted for 87 percent of the segment’s dollar intake, growing 6 percent to $1.81 billion.
 
Domestic ad sales revenues were up 4 percent, and while that lagged behind the double-digit gains posted by Turner Broadcasting System, Discovery Communications, Fox Cable Networks, Comcast Networks and Rainbow Media, on a volume basis, only Turner racks up the $1 billion quarterly sales figures commanded by Viacom.
 
 Global ad sales were up 4 percent as well, totaling $1.12 billion. Affiliate fees grew 11 percent to $790 million, while domestic sub fees were up 12 percent from the prior-year period. Adjusted operating income at the cable division rose 14 percent to $789 million.
 
In a note to investors, BTIG Research analyst Richard Greenfield noted that while the outlook for the general ad market remains unclear, “MTV’s ad revenues should continue to accelerate over the course of 2010.” Greenfield said that the MTV Networks should get a boost from its 2010-11 upfront sales, which were “dramatically better than its 2009-10 upfront, due to ratings improvements.”
 
Viacom president and CEO Philippe Dauman told investors that the MTV Networks were able to lock in mid to high single-digit CPM increases in this year’s upfront, adding that the unit moved slightly more than half of its available inventory. Per RBC Capital Markets estimates, Viacom averaged a 5.5 percent pricing premium during the annual bazaar, while lifting dollar volume 15 percent.
 
While predictably bullish on his company’s performance, Viacom chairman Sumner Redstone did sound a slight note of caution in his prefatory remarks, saying of the economy, “Of course, we are not all the way back, but the horizon is brighter than it has been for a long time.”
 

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