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Viacom Reports Q2 Ended 6/30/10 – Net Income Up 51 Percent, Rock Band Losses Cut

All numbers in millions of U.S. dollars

Consolidated financial results for three months ended 06/30/10

  • Revenues – $3,301  [compared to $3,299 three months ended 06/30/09]
  • Operating income – $794  [compared to $586 three months ended 06/30/09]
  • Net earnings – $418 [compared to $277 three months ended 06/30/09]

Media Networks division financial results for three months ended 06/30/10

Viacom operates their video game business under the Media Networks division:

  • Revenues – $2,091  [compared to $1,966 three months ended 06/30/09]
  • Operating income – $789 [compared to $692 three months ended 06/30/09]

Full press release and link to financial statements after the break.

— Adjusted Operating Income Climbs 28% on Strong Growth in Media Networks and Filmed Entertainment Segments
— Adjusted Net Earnings and Adjusted Diluted EPS from Continuing Operations Increased 40% and 39% Respectively in the Quarter
NEW YORK, Aug 05, 2010 /PRNewswire via COMTEX/ —

Viacom Inc. (NYSE: VIA, VIA.B) today reported strong growth in operating income and profit on improving trends in the advertising market, continued strength of its affiliate revenues and lower film and distribution costs for the quarter ended June 30, 2010.

Consolidated revenues for the quarter were $3.30 billion, essentially flat with the prior year, as growth in affiliate, theatrical and advertising revenues offset lower home entertainment revenues. Adjusted operating income grew 28% to $794 million versus the prior year, reflecting 14% growth in Media Networks and a $77 million increase in the Filmed Entertainment segment. Viacom generated $418 million in adjusted net earnings from continuing operations attributable to Viacom, a 40% increase over the second quarter of 2009, and adjusted diluted earnings per share (EPS) of $0.68, up 39% year-over-year.

Sumner M. Redstone, Executive Chairman of Viacom, said, “Viacom’s strong bottom-line results reflect our focused strategy, our creative ingenuity and our disciplined financial approach. We are very pleased with our consistent progress and the solid results that Viacom continues to deliver for shareholders.”

Philippe Dauman, President and Chief Executive Officer of Viacom, said, “Viacom has significantly strengthened its financial position, driving free cash flow and continuing to expand our operating margins, culminating this quarter with the delivery of Viacom’s first quarterly cash dividend. Importantly, this was achieved without sacrificing our investment in programming, which allows us to further build our brands, launch major new hits and create even stronger connections with our audiences. As a result, we are well positioned to capitalize on improving trends in the advertising market. We have strong slates of new and returning programming debuting in the coming months on MTV, Nickelodeon, BET, Spike, Comedy Central and other networks, which we continue to deliver to audiences on multiple screens and devices.

“At Paramount Pictures, our film slate strategy focused on franchise opportunities coupled with the studio’s continued bottom-line vigilance is generating strong results. Our tentpole releases, Marvel Studios’ Iron Man 2 and DreamWorks Animation’s Shrek Forever After, both rank among the top five films in domestic box office for the year.”

Quarterly revenues of $3.30 billion were on par with the $3.299 billion generated in 2009. Solid growth in affiliate and advertising revenues resulted in a 6% increase in Media Networks revenues. Domestic advertising revenues increased 4% as the strong scatter market more than offset the impact of a weaker 2009 upfront. Worldwide advertising revenues were also up 4%. Worldwide affiliate revenues grew 11% in the quarter, primarily due to rate growth. Worldwide ancillary revenues were flat as growth in online content licensing fees and consumer products sales was offset by lower music video game royalties. Filmed Entertainment revenues were down 10% to $1.25 billion primarily due to lower home entertainment revenues, which declined 43% in the quarter. This decline reflects lower revenues from third party distribution arrangements as well as the release of three titles in the current quarter versus six titles in the comparable 2009 quarter. Worldwide theatrical revenues grew 10% in the quarter reflecting the solid performance of Marvel Studios’ Iron Man 2 and DreamWorks Animation’s Shrek Forever After as well as the solid carryover revenues from the previous quarter’s major releases. Worldwide television license fees decreased 2% primarily due to lower international syndicated television revenues.

Quarterly adjusted operating income increased 28% to $794 million compared with $619 million in the second quarter of 2009. This growth was led by a $97 million, or 14%, increase in Media Networks operating income, which was driven by higher affiliate and advertising revenues as well as lower losses from Rock Band. This growth was partially offset by the Company’s continued investment in programming. The Filmed Entertainment segment delivered a $69 million profit, which represents a $77 million improvement over the second quarter 2009 result, driven by lower costs due to fewer theatrical and home entertainment releases.

Quarterly adjusted net earnings from continuing operations attributable to Viacom increased $120 million, or 40%, to $418 million, principally due to higher operating income. Adjusted diluted earnings per share for the quarter were $0.68, a 39% increase over adjusted diluted EPS of $0.49 in the second quarter of 2009.

Debt

At June 30, 2010, total debt outstanding, including capital lease obligations, was $6.76 billion, compared with $6.77 billion at December 31, 2009. The Company’s cash balances increased to $677 million at June 30, 2010 compared with $298 million at December 31, 2009.

About Viacom

Viacom, consisting of BET Networks, MTV Networks and Paramount Pictures, is the world’s leading entertainment content company. It engages audiences on television, motion picture and digital platforms through many of the world’s best known entertainment brands, including MTV, VH1, CMT, Palladia, Logo, Nickelodeon, Nick at Nite, Nick Jr., TeenNick, Nicktoons, COMEDY CENTRAL, Spike TV, TV Land, BET, CENTRIC, Rock Band, AddictingGames, Atom, Neopets, Shockwave and Paramount Pictures. Viacom’s global reach includes approximately 170 channels and 500 digital media properties in more than 160 countries and territories.

For more information about Viacom and its businesses, visit www.viacom.com.

Cautionary Statement Concerning Forward-Looking Statements

This news release contains both historical and forward-looking statements. All statements that are not statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements reflect the Company’s current expectations concerning future results, objectives, plans and goals, and involve known and unknown risks, uncertainties and other factors that are difficult to predict and which may cause actual results, performance or achievements to differ. These risks, uncertainties and other factors include, among others: the public acceptance of the Company’s programs, motion pictures and games on the various platforms on which they are distributed; economic conditions generally, and in advertising and retail markets in particular; competition for audiences and distribution; the impact of piracy; technological developments and their effect in the Company’s markets and on consumer behavior; fluctuations in the Company’s results due to the timing, mix and availability of the Company’s motion pictures and games; changes in the Federal communications laws and regulations; other domestic and global economic, business, competitive and/or regulatory factors affecting the Company’s businesses generally; and other factors described in the Company’s news releases and filings with the Securities and Exchange Commission, including its 2009 Annual Report on Form 10-K and reports on Form 10-Q and Form 8-K. The forward-looking statements included in this document are made only as of the date of this document, and the Company does not have any obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances.

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