VIACOM TELLS INVESTORS IT WON'T DO 'ANYTHING STUPID'

CFO Delivers Cautiously Optimistic Outlook for Media Company

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NEW YORK (AdAge.com) -- "We won't do anything stupid" was the Viacom pitch investors heard at the UBS Warburg Media Week Conference on Tuesday.

Chief Financial Officer Richard Bressler, who claimed that he has a t-shirt

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with that slogan emblazoned on it, delivered a cautiously optimistic outlook for next year. While admitting that all well-run media groups should have 50% margin growth, he said Viacom is "in the mid-30s at the moment but we will get to 50%," but without specifying when that would happen.

Spoke confidently
Mr. Bressler, walking the stage rather than standing behind a podium, spoke confidently about Viacom's share of the media market. He presented revenues of $23.2 billion in 2001 compared with revenues of $24.3 billion in 2002. The largest Viacom moneymaker was cable TV, with revenue of $4.6 billion in 2002, up from $4.3 billion in 2001.

Mr. Bressler said Viacom's broadcast holdings -- CBS and UPN -- and nine cable networks have 23.8 million viewers. He boasted that CBS claimed 7 of the top 10 shows in the November sweeps, and Viacom's cable holdings had 8 of the top 10 shows, leading with The Osbournes on MTV. Mr. Bressler said that 80% of Viacom's business is in the fast-growing sectors of cable, radio and outdoor, not to mention broadcast TV. Cable accounted for the largest share at 33%. Viacom also hopes to expand its stake in radio, as low overhead costs -- Viacom's Infinity radio stations spend about $80 million a year, Mr. Bressler -- make it an attractive investment. 

Possible acquisitions
As for acquisitions, Mr. Bressler said The BET network, which Viacom bought in 2000 for $3 billion, has been growing by 20%. The company also recently acquired, for $13 million, the College Television Network, which Mr Bressler said dovetailed nicely with MTV in terms of similar brand and demographics. Although Viacom is interested in other cable acquisitions -- it has been eyeing several Spanish language nets -- it will not pursue general entertainment networks.

"There's too much tonnage," said Mr. Bressler, who noted, anecdotally, that The Godfather was playing on three different cable entertainment networks on one night recently. "The Godfather is one of my favorite films, but I'm not about to watch it three times in one night with all those commercials."

Viacom is focusing resources on new-media opportunities, Mr. Bressler said, mentioning 13 digital cable networks that they started this year, all of them profitable.  

Driving up stock price
Mr. Bressler's delivery was sober, sharp and widely appreciated by the investors in the room. The Viacom CFO was clearly among peers. "Everything we do is to drive our stock price up. That's what Sumner [Redstone, chairman], Mel [Karmazin, CEO] and I are here for," said Mr. Bressler, who called this obsession the company's "myopic focus."

There were no dramatic moments or surprises, which are often expected at Viacom presentations featuring Mr. Karmazin, who appeared Monday across town at the Credit Suisse media conference, where he declared that CBS may become a pay subscription network if TiVo makes significant inroads.

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