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COO Sticks With Predictions of 15% to 20% Increase

By Published on .

NEW YORK (AdAge.com) -- Viacom's president and chief operating officer repeated his belief today that the media giant will see prices during this season's TV ad selling season to increase 15% to 20% over last year.

Speaking to analysts during a conference call reporting Viacom's first-quarter results, Mel Karmazin said conversations he had with advertising agency heads at the recent American Association of Advertising Agencies conference indicated the selling season, known as the "upfront," will be strong.

Maneuvering by buyers
He admitted advertisers have been slow

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to pick up options for ads in the second and third quarter, but chalked that off to maneuvering by media buyers.

"Some of the agencies may be posturing for the upcoming upfront by indicating maybe business isn't as good," Mr. Karmazin said, adding, "You'd better buy often and fast and you'd better get your order in now."

Mr. Karmazin wouldn't expand on Viacom's strategy for this year's marketplace. For the past two years, Viacom has withheld inventory from the upfront, seeking higher prices in the "scatter" market, or sales made during the season.

"Waiting for scatter over the last few years has not turned out to be a bad decision," Mr. Karmazin said.

Net income: $443.1 million
For the quarter, Viacom, parent of CBS, MTV, Nickelodeon and UPN, posted net income of $443.1 million, up from a loss of $1.1 billion in the first quarter of 2002 due to a change in accounting principles; factoring out the accounting change, net income still rose 26% from the year-ago period.

Revenue rose 7% to $6.05 billion for the quarter, helped by a 6% increase in advertising revenue. Cable networks' ad revenue rose 17%, while broadcast ad revenue, which includes CBS, UPN and syndication, rose 6%.

Strong ad sales
Advertising sales were remarkably strong for the quarter despite the interruptions caused by the war in Iraq, the Easter holiday falling in April and the shift March to April of some college basketball tournament games, Mr. Karmazin said. He noted ad revenue at Viacom's TV stations rose 5% for the quarter; UPN was up 7% and CBS rose 3%.

"Obviously, the war cost us a lot of money," said Mr. Karmazin. He estimated the conflict cost the local stations one percentage point in ad sales growth, and cable networks lost $2 million in ad revenue they may not get back, but he said ad sales are back to normal.

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