Viacom Reports First Quarter 2009 Results

Viacom Reports First Quarter 2009 Results

NEW YORK, April 30 /PRNewswire-FirstCall/ -- Viacom Inc. (NYSE:VIA)(NYSE:and VIA.B) today reported financial results for the first quarter ended March 31, 2009.

2009 Results
Quarter Ended
March 31, Better/(Worse)
(in millions, except per share amounts) 2009 2008 2009 vs. 2008

Revenues $2,905 $3,117 (7)%
Operating income 442 567 (22)%
Net earnings attributable to Viacom 177 270 (34)%
Diluted EPS $0.29 $0.42 (31)%
Adjusted diluted EPS $0.29 $0.44 (34)%

Revenues for the first quarter of 2009 totaled $2.91 billion, a decline of 7%, primarily reflecting a 4-percentage point negative impact from foreign currency exchange, as well as lower ancillary and advertising revenues. Media Networks and Filmed Entertainment segment revenues were down 8% and 5% respectively. Operating income of $442 million declined 22% as a result of lower year-over-year revenues, which more than offset an $87 million net reduction in expenses in the quarter. Net earnings attributable to Viacom were $177 million, down 34%, with diluted earnings per share (EPS) of $0.29, a 31% decline versus the first quarter of 2008.

Sumner M. Redstone, Executive Chairman of Viacom, said, "The global economy continues to present significant challenges for all businesses, including those in the entertainment industry. Viacom is successfully navigating these uncertain waters by taking full advantage of our financial strength to invest in great content and to build on our enduring global brands."

Philippe Dauman, President and Chief Executive Officer of Viacom, said, "During the first quarter, we further reduced our debt, generated seasonally strong cash flow and aggressively managed our costs while continuing to invest in our future with new programming and strategic partnerships. The overall advertising market remained soft as marketers continue to adjust their spending to the recessionary conditions. Nevertheless, our cable programming and motion picture businesses are well positioned to prosper. Our demographically targeted television programming continues to command top value in the marketplace. For example, our Nickelodeon Kids' Choice Awards in March - the number-one cable telecast among kids in the first quarter and a new ratings record for the event - once again demonstrated our leadership in the kids market.

"A trip to the movie theater was an increasingly popular entertainment option for consumers in the first quarter and Paramount benefited with double-digit growth in its theatrical revenues. Higher movie theater attendance trends bode well for our slate, including the ongoing success of DreamWorks Animation's Monsters vs. Aliens as well as two major tentpole releases in the current quarter: J.J. Abrams' STAR TREK and Michael Bay's Transformers: Revenge of the Fallen."

Revenues

Revenues Quarter Ended
March 31, Better/(Worse)
(in millions) 2009 2008 2009 vs. 2008

Media Networks $1,865 $2,017 (8)%
Filmed Entertainment 1,087 1,146 (5)%
Eliminations (47) (46) NM
Total revenues $2,905 $3,117 (7)%

NM = Not Meaningful

First Quarter 2009 revenues of $2.91 billion declined 7% from $3.12 billion in 2008. Media Networks revenues were down 8% to $1.87 billion, principally due to a 37% decline in ancillary revenues. This reflected a challenging comparison to the particularly strong initial sales of the music video game Rock Band in the first quarter 2008 as well as a soft retail environment overall. Domestic advertising revenues decreased 9% with worldwide advertising revenues down 11%, including foreign currency exchange impact, as continued softness in the overall advertising market dampened ad sales. Affiliate revenues showed continued strength in the first quarter with growth of 13% on a worldwide basis, including a 3-percentage point benefit from certain domestic affiliate revenues that are not expected to continue in the future. Foreign currency exchange had a 2-percentage point negative impact on Media Networks revenues overall. Filmed Entertainment revenues decreased 5%, including a 7-percentage point negative impact from foreign currency exchange. Theatrical revenues were up 15%, driven by strong domestic box office performance. Home entertainment revenues were down 9%. This result reflects softness in the overall retail sector, as well as the overlap of $29 million in revenue recognized in the first quarter of 2008 in connection with the conclusion of an HD-DVD exclusivity arrangement and fewer titles released year-over-year, which were partially offset by the strong performance of DreamWorks Animation's Madagascar: Escape 2 Africa. A 9% decline in television license fees was driven by the number and mix of available titles.

Operating Income

Operating Income (Loss) Quarter Ended
March 31, Better/(Worse)
(in millions) 2009 2008 2009 vs. 2008

Media Networks $629 $694 (9)%
Filmed Entertainment (123) (63) (95)%
Corporate (61) (64) 5%
Eliminations (3) - NM
Total operating income $442 $567 (22)%

NM = Not Meaningful

First Quarter 2009 operating income decreased 22% to $442 million compared with $567 million in the first quarter of 2008. The first quarter 2009 results include an $87 million net reduction in total expenses, including approximately $50 million in cost savings related to the Company's fourth quarter 2008 restructuring activities. Media Networks operating income declined 9% to $629 million, reflecting the impact of lower ancillary and advertising revenues as well as a 3% increase in programming expenses, which more than offset the benefit of lower expenses and higher affiliate revenues. The Filmed Entertainment segment had an operating loss of $123 million. This loss reflects higher print and advertising expenses associated with the late March release of DreamWorks Animation's Monsters vs. Aliens, the absence of income recognized in the prior year in connection with the conclusion of an HD-DVD exclusivity arrangement and fewer home entertainment titles released versus the prior year.

First Quarter 2009 net earnings attributable to Viacom decreased $93 million, or 34%, to $177 million, principally due to lower operating income and increased foreign exchange losses. Diluted earnings per share for the quarter were $0.29, a 31% decline over diluted EPS of $0.42 in the first quarter of 2008, which included a $0.02 per share reduction from an impairment charge. Excluding the impact of this charge, current diluted EPS results were down 34% over adjusted diluted EPS of $0.44 in the prior year. The adjustment is detailed in the Supplemental Disclosures table at the end of this release.

Debt

At March 31, 2009, total debt outstanding, including capital lease obligations, decreased to $7.37 billion, compared with $8.00 billion at December 31, 2008. The Company's cash balances decreased to $259 million at March 31, 2009 compared with $792 million at December 31, 2008.

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, Logo, Rock Band, Nickelodeon, Nick at Nite, Noggin, AddictingGames, Neopets, COMEDY CENTRAL, Spike TV, TV Land, Atom, Gametrailers, BET and Paramount Pictures. Viacom's global reach includes approximately 170 channels and 400 online properties in 162 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 continuation or worsening of current economic conditions generally, and in advertising markets in particular; the public acceptance of the Company's programs, motion pictures and games; competition for audiences and distribution; 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; the impact of piracy; 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 2008 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.

VIACOM INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)

Quarter Ended
March 31,
2009 2008
(in millions, except earnings per share
amounts)

Revenues $2,905 $3,117
Expenses:
Operating 1,748 1,809
Selling, general and administrative 633 649
Depreciation and amortization 82 92

Total expenses 2,463 2,550

Operating income 442 567
Interest expense, net (109) (117)
Equity in losses of investee companies (33) (6)
Other items, net (19) (3)

Earnings before provision for income taxes 281 441
Provision for income taxes (101) (167)
Net earnings (Viacom and noncontrolling
interests) 180 274

Less: Net earnings attributable to
noncontrolling interest (3) (4)

Net earnings attributable to Viacom $177 $270

Earnings per share attributable to Viacom:
Basic $0.29 $0.42
Diluted $0.29 $0.42

Weighted average number of common shares
outstanding:
Basic 606.8 639.6
Diluted 607.1 641.0

VIACOM INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)

March 31, December 31,
2009 2008
(in millions, except par value)
ASSETS
Current assets:
Cash and cash equivalents $259 $792
Receivables, net (including retained interests
in securitizations) 1,573 2,271
Inventory, net 923 881
Deferred tax assets, net 205 203
Prepaid and other assets 380 355

Total current assets 3,340 4,502
Property and equipment, net 1,080 1,145
Inventory, net 4,216 4,133
Goodwill 11,457 11,470
Intangibles, net 638 674
Other assets 549 563

Total assets $21,280 $22,487

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $262 $574
Accrued expenses 1,041 1,304
Participants' share and residuals 1,249 1,537
Program rights obligations 449 384
Deferred revenue 461 442
Current portion of long-term debt 103 105
Other liabilities 505 496

Total current liabilities 4,070 4,842
Long-term debt 7,267 7,897
Participants' share and residuals 478 488
Program rights obligations 612 621
Deferred tax liabilities, net 54 12
Other liabilities 1,597 1,556
Redeemable noncontrolling interest 145 148
Commitments and contingencies
Viacom stockholders' equity:
Class A Common stock, par value $0.001, 375.0
authorized; 57.4 and 57.4 outstanding,
respectively - -
Class B Common stock, par value $0.001, 5,000.0
authorized; 549.5 and 549.4 outstanding,
respectively 1 1
Additional paid-in capital 8,207 8,186
Treasury stock (5,725) (5,725)
Retained earnings 4,673 4,496
Accumulated other comprehensive loss (114) (49)

Total Viacom stockholders' equity 7,042 6,909

Noncontrolling interests 15 14

Total equity 7,057 6,923

Total liabilities and equity $21,280 $22,487

VIACOM INC.
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION

The following table reconciles the Company's results for the quarter ended
March 31, 2008, to adjusted results that exclude the impact of an
impairment charge of a minority investment. The Company uses adjusted
operating income, adjusted net earnings attributable to Viacom and
adjusted diluted EPS as applicable, among other measures, to evaluate the
Company's operating performance in the absence of certain items and for
planning and forecasting of future periods. The Company believes that the
adjusted results provide relevant and useful information for investors
because it allows investors to view performance in a manner similar to the
method used by the Company's management, improves their ability to
understand the Company's operating performance and makes it easier to
compare the Company's results with other companies. Since adjusted
operating income, adjusted net earnings attributable to Viacom and
adjusted diluted EPS are not measures of performance calculated in
accordance with GAAP, they should not be considered in isolation of, or as
a substitute for operating income, net earnings attributable to Viacom and
diluted EPS as indicators of operating performance and they may not be
comparable to similarly titled measures employed by other companies.

(in millions, except Quarter Ended
per share amounts) March 31, 2008

Net Earnings
Operating Pre-tax Attributable Diluted
Income Earnings(1) to Viacom(2) EPS

Reported results $567 $441 $270 $0.42
Adjustments:
Impairment of
investment(3) - 12 12 0.02
Adjusted results $567 $453 $282 $0.44

(1) Pre-tax earnings represent earnings before provision for income taxes
(2) The tax impact of adjustments has been calculated where appropriate
using the applicable rates in effect for the period presented.
(3) 2008 adjusted results exclude a $12 million pre-tax non-cash
investment impairment charge for the quarter ended March 31, 2008.

Source: Viacom Inc.

CONTACT: Press: Carl Folta, Executive Vice President, Corporate
Communications, +1-212-258-6352, carl.folta@viacom.com, or Kelly McAndrew,
Vice President, Corporate Communications, +1-212-846-7455,
kelly.mcandrew@viacom.com; or Investors: James Bombassei, Senior Vice
President, Investor Relations, +1-212-258-6377, james.bombassei@viacom.com, or
Pamela Yi, Director, Investor Relations, +1-212-846-7581,
pamela.yi@viacom.com

Web Site: http://www.viacom.com/

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