Ad Weakness and Blockbuster Write-Down Widen Viacom Losses

26 April 2002

US media group Viacom was ruefully contemplating the cost of its high exposure to the ad market and a $1.48 billion write-down on its Blockbuster unit as it reported a $1.11bn (£0.76bn; €1.24bn) loss for the first quarter, dramatically wider than the $7.3m shortfall posted twelve months ago.

Viacom – owner of broadcast networks CBS and UPN, Infinity radio stations and the MTV and Nickelodeon cable operations – said revenues slipped 1.4% to $5.67bn, while EBITDA (earnings before interest, tax, depreciation and amortization) sank 5% to $1.095bn.

The ad slowdown took its toll on the TV unit, where EBITDA tumbled 20% to $252.2m, and Infinity, whose EBITDA sank 15% to $274m. However, the cable networks arm provided some relief, with a 12% EBITDA boost to $403.3m.

Viacom maintained its forecasts of a double-digit percentage rise in full-year EBITDA for 2002, noting signs of an improvement in the advertising market. It expects a rise in ad revenues in the second quarter, with prices of week-to-week (scatter) ad sales currently up 10% to 15% on last year.

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