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Viacom Reports $18 Billion Fourth-Quarter Loss

Cites Weakness in Radio, Outdoor Units

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NEW YORK ( -- Viacom took an impairment charge of $18 billion in the fourth quarter, an acknowledgment that its radio and outdoor businesses have declined in value. The media company, which owns Infinity Broadcasting and Viacom Outdoor along with broadcast and cable TV properties and film studios, reported fourth quarter and full year 2004 results today.

Operating income
For the fourth quarter, Viacom's net loss was $18.4 billion, compared with a net loss of $385.4 million in the same period last year. For the full year Viacom reported a net loss of $17.4 billion vs. net income of $1.4 billion in the previous year. Viacom reported an operating loss of $13 billion in 2004 vs. operating income of $4.5 billion in 2003. Excluding the charges, Viacom's full year operating income increased 14% to $5.1 billion, driven by cable and network TV increases.

Infinity Broadcasting, and the radio business in general, is struggling to recover from an era of rapid consolidation and cost cutting. While Viacom is likely to shed some of its radio assets, it has pledged to make heavier investment in the area and assist in improving marketing.

Radio division
The radio division reported an operating loss of $10.7 billion on revenues of $550 million. Operating income dropped 9%, to $231 million, reflecting weakness in the local ad market and higher costs for talent and marketing. For the year revenues in radio were flat at $2.1 billion with ad revenue from the top 20 markets growing only 1% despite 2004 being an election year.

In a statement, Viacom's chairman-CEO, Sumner Redstone, said, "We are poised to move rapidly to increase our investment and re-evaluate our portfolio in radio and to focus on higher return areas within outdoor."

Viacom Outdoor
Viacom Outdoor reported a fourth-quarter operating loss of $7 billion on its global billboard business. Revenues were higher, up 9% to $514 million, with European operations reporting higher returns than North America.

Elsewhere Viacom was buoyed by an 11% jump in advertising revenues in 2004. Cable network revenues were up 17% to $6.6 billion. The networks, which include MTV, Comedy Central and Nickelodeon, reported a 21% growth in ad revenue for the year, with affiliate revenue up 8%.

Cable TV ad revenues
For the fourth quarter ad revenues grew 15% to $1.9 billion. Viacom's cable networks are much sought after by advertisers because they target a wide audience, including advertiser-coveted teens, young men and children.

At the broadcast networks, UPN and CBS -- which benefited from a Super Bowl broadcast in 2004 -- delivered combined ad revenues that were 12% higher for the year. Ad revenue at station groups was up 10% year-on-year on the back of political ad dollars. Fourth-quarter ad revenue growth was 5% for CBS and UPN. Strong sales of the DVD releases for Star Trek: Deep Space Nine and Star Trek: Original also helped the TV unit, which includes Paramount Television.

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