Viacom Reports Third Quarter 2009 Results

Viacom Reports Third Quarter 2009 Results

- Operating Income Increased 14% with Gains in Filmed Entertainment and Media Networks - Adjusted Net Earnings from Continuing Operations Grew 24% - Adjusted Diluted EPS of $0.69 Rose 25% versus the Prior Year's Adjusted Results

NEW YORK, Nov. 3 /PRNewswire-FirstCall/ -- Viacom Inc. (NYSE:VIA) (NYSE:and VIA.B) today reported a 14% increase in operating income and a 24% rise in adjusted net earnings for the third quarter ended September 30, 2009, with growth in Filmed Entertainment and Media Networks.

   2009 Results                          Quarter Ended           Nine Months Ended                          September 30,   B/(W)     September 30,     B/(W)   (in millions, except                  2009 vs.                    2009 vs.    per share amounts)     2009   2008    2008      2009      2008    2008    Revenues              $3,317  3,408    (3%)    $9,521    10,382     (8%)   Operating income         784    689    14%      1,812     2,048    (12%)   Adjusted operating    income(1)               784    689    14%      1,845     2,048    (10%)   Net earnings from    continuing operations    attributable to    Viacom                  443    385    15%        897     1,061    (15%)   Adjusted net earnings    from continuing    operations    attributable to    Viacom(1)               421    339    24%        896     1,027    (13%)   Diluted EPS from    continuing    operations             0.73   0.62    18%       1.48      1.68    (12%)   Adjusted diluted    EPS(1)                $0.69   0.55    25%      $1.47      1.63    (10%)     (1)Adjusted measures referenced in this release are detailed in the      Supplemental Disclosures at the end of this release.    

During the third quarter 2009, Viacom revenues decreased 3% to $3.32 billion, primarily reflecting lower home entertainment and advertising sales, which more than offset increases in affiliate sales and theatrical revenues. The gain in operating income in the quarter was driven primarily by an $88 million increase in the Filmed Entertainment segment. Adjusted net earnings from continuing operations attributable to Viacom were $421 million, up 24% over the third quarter 2008 results, with adjusted diluted earnings per share (EPS) of $0.69, a 25% increase over the prior year's results.

Sumner M. Redstone, Executive Chairman of Viacom, said, "As we enter a period of economic recovery, Viacom is already beginning to reap the benefits of a highly focused and well executed strategy. With our strong brands and growing global footprint, we are well positioned to capitalize on future opportunities."

Philippe Dauman, President and Chief Executive Officer of Viacom, said, "We continued to take a number of actions to strengthen our financial position, tighten our operations and improve execution across our businesses. The third quarter proved to be an opportune time to extend our long-term debt maturities at favorable rates, which allowed us to further strengthen our balance sheet. We continue to build on our leadership position in the cable networks business by strengthening our brands and working closely with our marketing partners to develop comprehensive, multiplatform solutions. A stronger programming slate drove ratings gains at several core networks and MTV delivered another record-setting Video Music Awards. And fans young and old have come together to celebrate The Beatles: Rock Band.

"At Paramount, the release of Transformers: Revenge of the Fallen late in the second quarter coupled with the mid-summer release of G.I. Joe: The Rise of Cobra continued to draw audiences into theatres, driving the studio's theatrical revenues and positioning us well for fourth quarter DVD sales."

   Revenues    Revenues            Quarter Ended    B/(W)     Nine Months Ended    B/(W)                       September 30,   2009 vs.     September 30,    2009 vs.   (in millions)        2009    2008     2008        2009     2008     2008    Media Networks     $2,124  $2,128       -       $5,955   $6,281      (5%)   Filmed    Entertainment      1,224   1,309      (6%)      3,691    4,226     (13%)   Eliminations          (31)    (29)     N/M        (125)    (125)     N/M      Total revenues  $3,317  $3,408      (3%)     $9,521  $10,382      (8%)     N/M = Not Meaningful    

Third Quarter 2009 revenues of $3.32 billion declined 3% from $3.41 billion in 2008. Media Networks revenues were essentially flat at $2.12 billion, with solid growth in affiliate sales offset by lower advertising and ancillary revenues. Worldwide affiliate revenues grew 10% in the quarter. Domestic advertising revenues were down 4%, which is a 2-percentage point sequential improvement over the second quarter 2009 results. Worldwide advertising revenues declined 5%. Strong sales of The Beatles: Rock Band video game were offset by lower home entertainment and consumer products revenues, resulting in a 3% decrease in worldwide ancillary revenues. Filmed Entertainment revenues were down 6% year-over-year to $1.22 billion as weakness in home entertainment sales more than offset growth in theatrical revenues. Transformers: Revenge of the Fallen and G.I. Joe: The Rise of Cobra fueled a 16% increase in worldwide theatrical revenues. Worldwide home entertainment revenues decreased 21%, which primarily reflects a difficult comparison with the strong performance of the DVD release of Iron Man in the third quarter of 2008. Television license fees were down 8% in the quarter.

   Operating Income    Operating Income      Quarter Ended    B/(W)   Nine Months Ended    B/(W)    (Loss)               September 30,   2009 vs.   September 30,    2009 vs.   (in millions)         2009     2008     2008     2009      2008     2008    Media Networks        $773     $761       2%   $2,089    $2,220      (6%)   Filmed    Entertainment          69      (19)     N/M      (62)        4      N/M   Corporate              (59)     (53)    (11%)    (181)     (176)     (3%)   Eliminations             1        -      N/M       (1)        -      N/M      Total adjusted       operating income  $784     $689      14%   $1,845    $2,048     (10%)    Adjustments(1)           -        -      N/M      (33)        -      N/M      Total operating       income            $784     $689      14%   $1,812    $2,048     (12%)     N/M = Not Meaningful   (1) Adjustments, which affect the nine-month period, are detailed in the       Supplemental Disclosures at the end of this release.    

Third Quarter 2009 operating income increased 14% to $784 million compared with $689 million in the third quarter of 2008. This result was driven by the Filmed Entertainment segment which swung from a loss in the previous year to a $69 million profit in the third quarter of 2009, reflecting the strong performance of Transformers: Revenge of the Fallen and the positive impact of the 2008 restructuring and other cost-saving initiatives. Media Networks operating income grew 2% to $773 million, reflecting continued growth in affiliate revenues as well as the benefits from the 2008 restructuring and other cost-saving initiatives.

Third Quarter 2009 adjusted net earnings from continuing operations attributable to Viacom increased $82 million, or 24%, to $421 million, principally due to higher operating income. Adjusted diluted earnings per share for the quarter were $0.69, a 25% increase over $0.55 in the third quarter of 2008. These results exclude the favorable impact of discrete tax benefits as well as an after-tax loss related to the extinguishment of debt in the quarter.

Debt

At September 30, 2009, total debt outstanding, including capital lease obligations, decreased to $6.85 billion, compared with $8.00 billion at December 31, 2008. The Company's cash balances decreased to $249 million at September 30, 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, 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 400 online 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 worsening of current economic conditions generally, and in advertising and retail markets in particular; the public acceptance of the Company's programs, motion pictures and games on the various platforms on which they are distributed; 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     Nine Months Ended   (in millions, except earnings         September 30,       September 30,    per share amounts)                  2009      2008      2009     2008     Revenues                           $3,317    $3,408    $9,521   $10,382   Expenses:      Operating                        1,790     1,945     5,481     5,992      Selling, general and       administrative                    663       682     1,986     2,061   Depreciation and amortization          80        92       242       281         Total expenses                 2,533     2,719     7,709     8,334    Operating income                      784       689     1,812     2,048      Interest expense, net             (107)     (123)     (325)     (363)      Equity in losses of investee       companies                          (1)      (32)      (57)      (48)      Loss on extinguishment of debt     (84)        -       (84)        -      Other items, net                   (13)      (23)      (47)      (38)     Earnings from continuing operations    before provision for income taxes    579       511     1,299     1,599   Provision for income taxes           (133)     (122)     (392)     (526)    Net earnings from continuing    operations                           446       389       907     1,073   Discontinued operations, net of tax    20        16        20        17    Net earnings (Viacom and    noncontrolling interests)            466       405       927     1,090   Less: Net earnings attributable to    noncontrolling interest               (3)       (4)      (10)      (12)    Net earnings attributable to Viacom  $463      $401      $917    $1,078    Amounts attributable to Viacom:      Net earnings from continuing       operations                       $443      $385      $897    $1,061      Discontinued operations, net       of tax                             20        16        20        17      Net earnings attributable to       Viacom                           $463      $401      $917    $1,078    Basic earnings per share    attributable to Viacom:      Continuing operations            $0.73     $0.62     $1.48     $1.69      Discontinued operations          $0.03     $0.03     $0.03     $0.02      Net earnings per share       of Viacom                       $0.76     $0.65     $1.51     $1.71    Diluted earnings per share    attributable to Viacom:      Continuing operations            $0.73     $0.62     $1.48     $1.68      Discontinued operations          $0.03     $0.03     $0.03     $0.03      Net earnings per share       of Viacom                       $0.76     $0.65     $1.51     $1.71    Weighted average number of common    shares outstanding:      Basic                            607.3     618.9     607.0     629.2      Diluted                          608.6     619.3     607.9     630.1                                     VIACOM INC.                          CONSOLIDATED BALANCE SHEETS                                  (Unaudited)                                               September 30,     December 31,                                                      2009             2008    (in millions, except par value)    ASSETS   Current assets:     Cash and cash equivalents                        $249             $792     Receivables, net (including retained     interests in securitizations)                   1,866            2,271     Inventory, net                                    854              881     Deferred tax assets, net                          258              203     Prepaid and other assets                          378              355       Total current assets                          3,605            4,502   Property and equipment, net                       1,042            1,145   Inventory, net                                    3,993            4,133   Goodwill                                         11,498           11,470   Intangibles, net                                    593              674   Other assets                                        576              563    Total assets                                    $21,307          $22,487    LIABILITIES AND EQUITY   Current liabilities:     Accounts payable                                 $238             $574     Accrued expenses                                1,015            1,304     Participants' share and residuals               1,097            1,537     Program rights obligations                        427              384     Deferred revenue                                  393              442     Current portion of long-term debt                 101              105     Other liabilities                                 436              496       Total current liabilities                     3,707            4,842   Long-term debt                                    6,751            7,897   Participants' share and residuals                   544              488   Program rights obligations                          576              621   Deferred tax liabilities, net                       282               12   Other liabilities                                 1,233            1,556   Redeemable noncontrolling interest                  170              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; 550.0 and 549.4      outstanding, respectively                          1                1     Additional paid-in capital                      8,256            8,186     Treasury stock                                 (5,725)          (5,725)     Retained earnings                               5,408            4,496     Accumulated other comprehensive income     (loss)                                             89              (49)     Total Viacom stockholders' equity               8,029            6,909   Noncontrolling interests                             15               14   Total equity                                      8,044            6,923   Total liabilities and equity                    $21,307          $22,487                                  VIACOM INC.       SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION    The following tables reconcile the Company's results for the quarter and   nine months ended September 30, 2009 and 2008, respectively, to adjusted   results that exclude the impact of severance charges, an impairment charge   of a minority investment, early extinguishment of debt and net discrete   tax benefits.  The Company uses adjusted operating income, adjusted net   earnings from continuing operations 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 from continuing operations 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 from continuing operations   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.      Consolidated Results     (in millions, except per               Quarter Ended    share amounts)                      September 30, 2009                                                   Net Earnings                                   Pre-tax      from Continuing                                 Earnings from    Operations                      Operating   Continuing     Attributable to                      Income     Operations (1)    Viacom (2)     Diluted EPS    Reported results     $784        $579             $443            $0.73   Adjustments:     Extinguishment      of debt(3)           -          84               52             0.08     Discrete tax      benefits(4)          -           -              (74)           (0.12)   Adjusted results     $784        $663             $421            $0.69       (in millions, except per                Nine Months Ended    share amounts)                        September 30, 2009                                                   Net Earnings                                   Pre-tax      from Continuing                                 Earnings from    Operations                      Operating   Continuing     Attributable to                      Income     Operations (1)    Viacom (2)     Diluted EPS     Reported results   $1,812      $1,299             $897           $1.48   Adjustments:     Severance      charges(5)          33          33               21            0.03     Extinguishment      of debt(3)           -          84               52            0.08     Discrete tax      benefits(4)          -           -              (74)          (0.12)   Adjusted results   $1,845      $1,416             $896           $1.47                                       VIACOM INC.         SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION    Consolidated Results, con't.    (in millions, except per                Quarter Ended   share amounts)                       September 30, 2008                                                   Net Earnings                                   Pre-tax      from Continuing                                 Earnings from    Operations                      Operating   Continuing     Attributable to                      Income     Operations (1)    Viacom (2)     Diluted EPS    Reported results     $689        $511              $385          $0.62   Adjustments:     Discrete tax      benefits(4)          -           -               (46)         (0.07)   Adjusted results     $689        $511              $339          $0.55       (in millions, except per               Nine Months Ended    share amounts)                      September 30, 2008                                                   Net Earnings                                   Pre-tax      from Continuing                                 Earnings from    Operations                      Operating   Continuing     Attributable to                      Income     Operations (1)    Viacom (2)     Diluted EPS     Reported results   $2,048      $1,599            $1,061          $1.68   Adjustments:     Impairment of      investment(6)        -          12                12           0.02     Discrete tax      benefits(4)          -           -               (46)         (0.07)   Adjusted results   $2,048      $1,611            $1,027          $1.63     (1)Pre-tax earnings from continuing operations 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)For the quarter and nine months ended September 30, 2009, adjusted      results exclude an $84 million pre-tax loss on the early extinguishment      of a portion of the Company's 5.75% Senior Notes due 2011.   (4)2009 and 2008 adjusted results exclude $74 million and $46 million,      respectively, of net discrete tax benefits for the quarter and nine      months ended September 30, 2009 and 2008.  The majority of the discrete      tax benefits were the result of effectively settled audits.   (5)For the nine months ended September 30, 2009, adjusted results exclude      $33 million of severance expenses attributable to the Media Networks      and Filmed Entertainment segments, which occurred in the 2nd quarter of      2009.   (6)For the nine months ended September 30, 2008, adjusted results exclude      a $12 million pre-tax non-cash investment impairment charge, which      occurred in the 1st quarter of 2008.                                   VIACOM INC.      SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION     There were no adjustments to operating income in the quarter ended   September 30, 2009 or in the quarter and nine months ended September 30,   2008.     Segment Results    (in millions, except per             Nine Months Ended    share amounts)                     September 30, 2009                                                                     Total                         Media    Filmed                            Operating                      Networks Entertainment Corporate Eliminations  Income    Reported results    $2,073     $(79)       $(181)      $(1)      $1,812   Adjustments:     Severance      charges(1)           16       17            -         -           33   Adjusted results    $2,089     $(62)       $(181)      $(1)      $1,845     (1)For the nine months ended September 30, 2009, adjusted operating income      excludes $33 million of severance expenses attributable to the Media      Networks and Filmed Entertainment segments, which occurred in the 2nd      quarter of 2009.  

First Call Analyst:
FCMN Contact: james.bombassei@viacom.com

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, all of Viacom Inc.

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

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Profile: International Entertainment