Ad Slump Hits Viacom's Q3 Profits

05 November 2008

NEW YORK: Viacom's net income fell by 37% year-on-year in the third quarter of 2008, as the media giant's "advertising business continues to feel the effect of the macroeconomic trends in the quarter," according to chief executive Philippe Dauman.

Net income declined from $641 million (€503m; £405m) in the year-ago period to $401m in Q3 2008, although overall revenues increased by 4.2% to a total of $3.4 billion.

US ad revenues were down 3% compared with Q3 2007, with automotive, videogame and beverage advertising among the main areas of weakness.

Total sales actually increased following an uplift of approximately 12% in the affiliate fees paid to Viacom by cable and satellite providers linked to its operations around the world.

Ancillary revenues from areas outside its core traditional operations also rose by 36%, helped by sales of the videogame “Rock Band”.

Its media networks unit, however, posted a 4.4% loss in income, due both to declining ad revenues and an increase in programming costs.

Dauman says the harsh ad climate "hasn't changed much" since the third quarter, but also argues: "We have taken, and will continue to take, all appropriate steps to prepare for whatever challenges lie ahead."

Data sourced from Wall Street Journal Online; additional content by WARC staff