Viacom:
"We will not do anything stupid:"
The above quote can be found on the newest Viacom (N:VIA) t-shirt. It underscores President/COO Mel Karmazin's promise to continue delivering performance like that turned in for Q2 2002.
"Viacom turned in an outstanding performance in the second quarter of 2002," said Chairman/CEO Sumner Redstone, "particularly in light of the continuing challenges of a slow recovery in the overall economic environment."
The Q2 Viacom performance was outstanding performance in the second quarter of 2002," said Chairman/CEO Sumner Redstone, "particularly in light of the continuing challenges of a slow recovery in the overall economic environment."
Viacom's Q2 numbers definitely support Redstone's comments. Revenues for Q2 at multimedia giant Viacom (N:VIA) were $5.85B, up from $5.72B for the same period last year, and operating income increased to $1.18B, more than double the $586M it posted in Q2 2001.
Free cash flow increased 22% to $1.03B; EBITDA was up 4% to $1.42B.
Net earnings were $547M, or $0.31 per diluted share. Last year during Q2, earnings were a paltry $17M, or $0.01 per diluted share. (However, had SFAS No. 142 "Goodwill and Other Intangible Assets been in force in early 2001, net earnings would have been $1.13B/$0.29 per diluted share.)
Viacom's cable, television and video operations led the charge in Q2. In terms of operating income adjusted for SFAS, cable was up 9%, TV was up 7% and video was up 21%.
Infinity (encompassing radio and outdoor properties) had a slight gain in total revenue, moving from $985.4M in Q2 2001 to $989.2M this time around. Said President/COO Mel Karmazin, "Radio reported higher revenues in the second quarter, its first year-to-year revenue growth since the fourth quarter of 2000. In the current quarter, radio pacings are up high single-digits, our television stations are pacing up double-digits versus the same prior-year quarter, and outdoor pacing continue to show improvement."
Minority-owned Blaylock and Partners have initiated coverage of Viacom stock, offering a buy recommendation. They said that Viacom's media and entertainment assets are hard to top, and the combination of excellent cash flow and a simple balance sheet make it an attractive investment.
RBR observation:
This is a happy family, and the happiest family members may well be the two at the head of the table. Redstone and Karmazin have been the subject of feud stories so frequently you'd almost expect them to be toting shotguns on days they're likely to see each other. No evidence of that today, as Redstone showered the Zen Master with praise.
For his part, Karmazin expressed the wish that all participating in the conference call could see the Viacom contingent's relaxed, smiling faces.
Without getting specific, he got some digs in, making remarks beginning with the phrase, "Unlike some other companies...." He noted that there was no problem whatsoever with Viacom's credit facility; he noted that, unlike others, Viacom would not overpay for acquisitions, no matter how desirable they would have been had the price remained logical.
While the company sticks to the knitting, avoiding avenues of business outside its core, it is sufficiently diversified that all of the eggs are not in one basket. Said Karmazin, "Viacom's second quarter results point out the unique value of our mix of buisinesses and the strength of our position in those businesses. Our cable networks, television and video segments delivered top line growth and strong bottom line growth. Underlying this performance is an upswing in our advertising-supported businesses. Upfront sales at CBS, UPN, our cable networks and our syndication businesses were exceptionally strong, which bodes well for advertising during the rest of 2002 and in 2003."
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