Viacom Reports Quarterly Results

Viacom Reports Quarterly Results

- Operating Income Growth of 21% Reflects Improvement in Media Networks and Filmed Entertainment - Net Earnings from Continuing Operations and Diluted EPS from Continuing Operations Rose 37% and 38% Respectively in the Quarter

NEW YORK, April 29 /PRNewswire-FirstCall/ -- Viacom Inc. (NYSE:VIA)(NYSE: VIA.B) today reported strong double-digit growth in operating income, net earnings from continuing operations and diluted earnings per share (EPS) for the quarter ended March 31, 2010, reflecting solid growth in Media Networks and improvement in Filmed Entertainment.

2010 Results

Quarter Ended B/(W)
March 31, -----
---------
(in millions, except per share 2010 vs.
amounts) 2010 2009 2009
------------------------------ ---- ---- ---------

Revenues $2,786 $2,905 (4%)
Operating income 534 442 21
Net earnings from continuing
operations attributable to
Viacom 243 177 37
Diluted EPS from continuing
operations $0.40 $0.29 38%

Revenues for the quarter totaled $2.79 billion, a decline of 4% from the prior year, as growth in affiliate and advertising revenues was more than offset by lower feature film revenues. Operating income increased 21% to $534 million reflecting solid growth in Media Networks. Net earnings from continuing operations attributable to Viacom were $243 million, a 37% increase over the prior year, with diluted earnings per share (EPS) of $0.40, up 38% versus the first quarter of 2009.

Sumner M. Redstone, Executive Chairman of Viacom, said, "Viacom is off to an excellent start this year, delivering a strong performance, including outstanding bottom-line results. As the economy continues to strengthen, Viacom's operational and financial discipline and fervent focus on content should continue to produce increasingly significant benefits across all of our businesses."

Philippe Dauman, President and Chief Executive Officer of Viacom, said, "Over the past quarter, we have seen momentum building in our television and film businesses as our efforts to stoke the creative fires across Viacom and an improving economy continue to take hold. With a boost in ratings at our core networks and the advertising market showing signs of strength, our ad revenues moved into positive territory and are continuing that upward trend. Our focus on reinvigorating MTV's ratings generated results this quarter with the network not only delivering its highest rated quarter in nearly two years but also five of the top 15 original cable series in its target demographic. Among other highlights, Nickelodeon and BET continued to grow their audiences as each network launched new hits and continued to nurture fan favorites.

"Paramount Pictures' 2010 film slate is off to a strong start and we are about to launch into the summer movie season in spectacular fashion with the opening of Iron Man 2 next weekend. This blockbuster sequel will be followed shortly by DreamWorks Animation's Shrek Forever After in 3D and our Nickelodeon Movies tentpole, M. Night Shyamalan's The Last Airbender. The release of these high-profile titles should bode well for the studio's overall performance as they move through their revenue windows."

Revenues

Revenues Quarter Ended
March 31, B/(W)
---------
2010 vs.
(in millions) 2010 2009 2009
------------- ---- ---- ---------

Media Networks $1,938 $1,865 4%
Filmed Entertainment 886 1,087 (18)
Eliminations (38) (47) N/M
--- ---
Total revenues $2,786 $2,905 (4%)

N/M = Not Meaningful

Quarterly revenues of $2.79 billion declined 4% from $2.91 billion in 2009. Media Networks revenues increased 4% to $1.94 billion driven by growth in affiliate fees and advertising sales. Domestic advertising revenues grew 1% fueled by a strengthening scatter market, which was partially offset by the ad sales completed during a weaker 2009 upfront. Worldwide advertising revenues were up 3%. Worldwide affiliate revenues grew 9% in the quarter, principally due to rate growth. Worldwide ancillary revenues declined 7% reflecting lower sales of Rock Band music video games. Filmed Entertainment revenues decreased 18% to $886 million, primarily due to a 34% decline in home entertainment revenues. This decrease principally reflects the success of the DreamWorks Animation Madagascar: Escape 2 Africa DVD release in first quarter of 2009 for which there was no comparable title in 2010. The current quarter benefited from the home entertainment release of Up in the Air and continuing sales of the fourth quarter releases of Star Trek, Transformers: Revenge of the Fallen and G.I. Joe: The Rise of Cobra. Theatrical revenues declined 6%, primarily due to lower year-over-year revenues from films originally released in the fourth quarter, which were partially offset by the strong performance of the 2010 release of Shutter Island. A 16% decrease in television license fees reflects the number and mix of available titles.

Operating Income

Operating Income (Loss) Quarter Ended
March 31, B/(W)
-----
2010 vs.
(in millions) 2010 2009 2009
------------- ---- ---- ---------

Media Networks $684 $629 9%
Filmed Entertainment (86) (123) N/M
Corporate (63) (61) (3)
Eliminations (1) (3) N/M
--- ---
Total operating income $534 $442 21%

N/M = Not Meaningful

Quarterly operating income grew 21% to $534 million, compared with $442 million in the first quarter of 2009, led by growth in Media Networks, which saw its operating income increase 9% to $684 million. This growth reflects the impact of higher affiliate and advertising revenues. The Filmed Entertainment segment had an operating loss of $86 million, a $37 million improvement over the first quarter 2009 result, which reflects lower costs due to fewer theatrical releases in the quarter.

Quarterly net earnings from continuing operations attributable to Viacom increased $66 million, or 37%, to $243 million, principally due to higher operating income. Diluted earnings per share for the quarter were $0.40, a 38% increase over diluted EPS of $0.29 in the first quarter of 2009.

Debt

At March 31, 2010, total debt outstanding, including capital lease obligations, was $6.79 billion, compared with $6.77 billion at December 31, 2009. The Company's cash balances increased to $358 million at March 31, 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, Logo, Nickelodeon, Nick at Nite, Nick Jr., COMEDY CENTRAL, Spike TV, TV Land, BET, Rock Band, AddictingGames, Atom, Neopets, Shockwave and Paramount Pictures. Viacom's global reach includes approximately 170 channels and 450 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.

VIACOM INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)

Quarter Ended
March 31,
---------

(in millions, except earnings per share amounts) 2010 2009
---- ----

Revenues $2,786 $2,905
Expenses:
Operating 1,521 1,748
Selling, general and administrative 653 633
Depreciation and amortization 78 82
--- ---

Total expenses 2,252 2,463

Operating income 534 442
Interest expense, net (113) (109)
Equity in net losses of investee companies (28) (33)
Other items, net (10) (19)
--- ---

Earnings from continuing operations before
provision for income taxes 383 281
Provision for income taxes (138) (101)
---- ----

Net earnings from continuing operations 245 180
Discontinued operations, net of tax 2 -
--- ---

Net earnings (Viacom and noncontrolling
interests) 247 180
Net earnings attributable to noncontrolling
interests (2) (3)
--- ---

Net earnings attributable to Viacom $245 $177
==== ====

Amounts attributable to Viacom:
Net earnings from continuing operations $243 $177
Discontinued operations, net of tax 2 -
--- ---
Net earnings attributable to Viacom $245 $177
==== ====

Basic earnings per share attributable to Viacom:
Continuing operations $0.40 $0.29
Discontinued operations $- $-
Net earnings $0.40 $0.29

Diluted earnings per share attributable to
Viacom:
Continuing operations $0.40 $0.29
Discontinued operations $- $-
Net earnings $0.40 $0.29

Weighted average number of common shares
outstanding:
Basic 607.6 606.8
Diluted 609.6 607.1

VIACOM INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)

March 31, December 31,
2010 2009
---- ----

(in millions, except par value)
ASSETS
Current assets:
Cash and cash equivalents $358 $298
Receivables, net 2,329 2,881
Inventory, net 848 779
Deferred tax assets, net 123 147
Prepaid and other assets 371 325
--- ---

Total current assets 4,029 4,430
Property and equipment, net 1,124 1,179
Inventory, net 4,100 3,731
Goodwill 11,339 11,401
Intangibles, net 524 570
Other assets 490 589
--- ---

Total assets $21,606 $21,900
======= =======

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $209 $248
Accrued expenses 940 1,169
Participants' share and residuals 1,089 1,090
Program rights obligations 407 404
Deferred revenue 340 323
Current portion of debt 40 123
Other liabilities 420 394
--- ---

Total current liabilities 3,445 3,751
Noncurrent portion of debt 6,745 6,650
Participants' share and residuals 587 739
Program rights obligations 591 523
Deferred tax liabilities, net 7 89
Other liabilities 1,227 1,303
Redeemable noncontrolling interest 154 168
Commitments and contingencies
Viacom stockholders' equity:
Class A Common stock, par value $0.001,
375.0 authorized; 52.4 and 52.4
outstanding, respectively - -
Class B Common stock, par value $0.001,
5,000.0 authorized; 555.3 and 555.0
outstanding, respectively 1 1
Additional paid-in capital 8,305 8,287
Treasury stock, 151.5 common shares held
in treasury (5,725) (5,725)
Retained earnings 6,323 6,106
Accumulated other comprehensive income
(loss) (28) 35
--- ---

Total Viacom stockholders' equity 8,876 8,704

Noncontrolling interests (26) (27)
--- ---

Total equity 8,850 8,677
----- -----

Total liabilities and equity $21,606 $21,900
======= =======

Source: Viacom Inc.

CONTACT: Press: Carl Folta, Executive Vice President, Corporate
Communications, +1-212-258-6352, carl.folta@viacom.com, or Kelly McAndrew,
Senior 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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