Viacom shrugs off ad slump to post profit

Viacom, the owner of global music television network MTV, US cable giant CBS and Paramount Pictures, has swung into profit as the strength of its entertainment networks helped offset war-related costs.

The world's third biggest media company also announced it had agreed to buy out AOL Time Warner's stake in their Comedy Central joint venture, home to popular adult cartoon South Park, for around £800m.

Viacom, which has shrugged off the ongoing advertising recession to become one of the best performing media companies of the past year, posted net income of £283m in the first quarter.

This compares with a loss of £710m for the same period last year, while revenues were up 7% on last year to a record £3.87bn.

The results exceeded Wall Street expectations, with analysts waiting to hear what Viacom will have to say about the prospect of an advertising recovery.

Its chief executive, Sumner Redstone, who recently settled a long running contract dispute with his number two Mel Karmazin, said the company was "off to a strong start in 2003".

"Our ability to deliver results to shareholders speaks of the quality and diversity of business lines as well as the superior performance of our management team," he added.

Mr Redstone said of the Comedy Central deal - which will see MTV ending its current agreement with HBO, and AOL Time Warner using the money from its share to cut its debt burden - that it was a "significant" and "important" transaction.

"Our long and productive partnership with AOL Time Warner and with Dick Parsons and his management team created a unique network with a loyal audience. We are pleased that we can continue to build on that legacy of success," he said.

The Viacom chief also hinted that the company would continue to look around for further acquisitions, particularly new cable networks. Last year he said the company would consider a takeover bid for ITV when TV ownership restrictions are lifted later this year.

"We look at all these assets and I am not ready to say we are buyers but I am not ready to say we are not," Mr Redstone said last November following a summit meeting with Tony Blair.

In the UK Viacom owns the MTV and VH1 family of channels and the London Underground advertising group Viacom Outdoor.

Mr Karmazin said one of Viacom's priorities for the rest of the year would be to improve revenues at its outdoor advertising and radio divisions, both of which underperformed in comparison with the broadcasting and movie arms.

It has pledged to pour more money into original programming for MTV in 2003, including a UK version of the hit US show Total Request Live, to counter the threat from Emap's music channels and three new music channel launches from Sky.

Viacom also owns Nickelodeon, Blockbuster Video, UCI Cinemas, Paramount Pictures and the Paramount Comedy Channel, film distributor UIP, publisher Simon & Schuster and the CBS and UPN broadcast networks.