Buoyed in part by the performance of its Dallas-based Blockbuster Video unit, Viacom Inc. (New York) posted a 21 percent increase in second quarter profits yesterday and said it would pay its first quarterly dividend in 16 years.
The announced dividend, 6 cents a share each quarter beginning Oct. 1, 2003, comes at a time when taxes on corporate dividends have been reduced, prompting some big companies to offer them.
For the second quarter, revenue climbed 9.7 percent.
Blockbuster Video saw a jump in operating profit of 46 percent and revenue rose 10 percent. Blockbuster's performance was largely due to increased rentals of DVDs, which generate higher profit margins than videocassette rentals. Blockbuster also benefited from the addition of 535 new company-operated stores since the end of June 2002.
Other impressive gains came from Viacom's largest division, the cable network unit, which includes MTV, BET and Nickelodeon. Operating profit surged 33 percent and revenue rose 22 percent.
Viacom's results were bolstered by additional revenue from the now wholly owned Comedy Central cable channel, the other 50 percent of which it acquired from AOL Time Warner in May for $1.2 billion. Though Viacom no longer breaks out pro forma figures to reflect how performance would have been if an acquisition had taken place in the quarter a year earlier, cfo Richard Bressler told investors that the additional income from Comedy Central's revenue was effectively offset by expenses related to layoffs at the channel. As a result, he said, the net effect on operating income was “immaterial.”
The television group, which includes the CBS and UPN networks and television stations, showed a 13 percent increase in operating profit and a revenue increase of 10 percent.
The radio unit continued to be a thorn in the company's side, suffering a 5 percent slip in operating profit and 3 percent drop in revenue.
But Viacom president Mel Karmazin told analysts, “We are seeing an improvement in our business,” adding that after radio revenue declined in April, it was up 8 percent by June. He added that in the 40 markets where Viacom has radio stations, outside research showed that revenue was up 2.1 percent over all but that Viacom stations posted a 3 percent increase, indicating that Viacom was taking market share from competitors. Mr. Karmazin said he was “guardedly optimistic” about radio for the second half of the year.
At the entertainment unit, which includes Paramount Pictures, theme parks and the book publisher Simon & Schuster, operating profit fell 36 percent and revenue declined 1 percent. Revenue at the theme parks dropped, the company said, but revenue at the publishing unit rose, benefiting from the success of Senator Hillary Rodham Clinton's memoir, “Living History.”