Viacom has announced strong Q1 results and plans to buy the remaining stake in Comedy Central.
Viacom, one of the top performers in the media sector over the last year, has reported a net income of $443 million for Q1, compared to a loss of $1.11 billion a year earlier. Revenue was up 7% to $6.05 billion.
Excluding the effects of an accounting change, Viacom earned $462 million, compared to $367 million in Q1 2002. The figures were roughly in line with analyst expectations.
Viacom also reported an agreement to buy the 50% of Comedy Central that it doesn’t already own for $1.23 billion. It will buy the stake from AOL Time Warner, which is attempting to sell off several non-core assets to reduce its debt.
AOL Time Warner is under particular pressure to make some sales quickly now that plans to spin off its cable division, one of the most important ways it was planning to cut debts, are looking unlikely. Viacom presumably hopes it will be able to run Comedy Central more efficiently once it has full control. AOL Time Warner’s problems have allowed Viacom to buy the asset at a reasonably low price.
For the latest quarter, the cable networks division saw revenue grow by 13%, while operating income rose 21%. Revenue from Blockbuster’s was up 14%.
The main disappointment came from the Infinity Broadcasting division, which operates more than 180 radio stations. Revenue was down 2%, while operating income showed only a slight increase.
The severity of the problem will become easier to judge once Infinity’s main radio rival Clear Channel Communications reports its own Q1 results. But for now, some patience seems warranted. Mel Karmazin, Viacom’s COO, is to refocus his attentions on improving the radio business and his previous experience as head of Infinity should give him an advantage in getting the business back on track.
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