Viacom Forecasts End of Ad Slump; Posts Healthy Q2 Results

27 July 2001

US media group Viacom yesterday expressed confidence that the worst of the ad slowdown was over, as it reported Q2 earnings above expectations.

“I believe this advertising environment has bottomed out,” exclaimed chief operating officer Mel Karmazin, stating that he was enthusiastic about the company’s prospects for the rest of the year. “The softness is temporary,” he added, though he declined to offer any guidance as to when the market might pick up.

Viacom beat analysts’ forecasts with a 12% rise in Q2 EBITDA (earnings before interest, taxes, depreciation and amortization) to $1.36 billion, on a 1% increase in sales to $5.71bn. Second-half EBITDA growth is forecast at 13%, ahead of some Wall Street estimates of 10%.

The robust performance comes in spite of the impact of the ad slump on Viacom's TV and radio units. The television group posted a 1% fall in revenues to $1.63bn, with EBITDA rising 16% to $361m, while the Infinity division, which includes radio and outdoor advertising saw its revenues tumble 4% to $985m and its EBITDA slide 5% to $436m.

In contrast, the revenues and EBITDA at the cable networks jumped 6% (to $1.06bn) and 25% (to $390m) respectively, while the entertainment arm, boosted by the successful release of Paramount’s Lara Croft: Tomb Raider movie, posted a 15% jump in EBITDA to $132m and a 3% rise in revenue to $773m.

News source: Financial Times