VIACOM SHOWS A PROFIT FOR THE FOURTH QUARTER

Strong Ad Sales Across Broadcast and Cable Boost Earnings

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NEW YORK (AdAge.com) -- Viacom posted strong fourth-quarter and year-end results, helped by improved advertising sales at CBS and its cable networks.

The company earned $652.4 million, or 37 cents per share, for the quarter ended Dec. 31, compared with a loss of $42.5 million, or 2 cents a share, for the same period in 2001.

For the year, Viacom reported net income of $725.7 million, or 41 cents per share, vs. a loss of $223.5 million, or 13 cents a share, for 2001. Factoring out the effect of accounting changes enacted in the first quarter, net income for the year would have been $2.2 billion.

All TV operations
Results were helped considerably

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Strong Ad Revenue Cited Across TV, Radio and Outdoor
by improved ad sales in all of Viacom's TV operations, said Chairman-CEO Sumner Redstone. He noted advertising sales rose 14% in the fourth quarter, which pushed total revenues up 12% to $6.8 billion. For the year, revenues rose 6% to $24.6 billion; five percentage points of that growth was due to advertising sales increases, said Chief Financial Officer Richard Bressler.

Improved advertising trends appear to be continuing into the first and second quarters, said Mel Karmazin, president and chief operating officer. CBS' first-quarter scatter ad sales showed strong demand and few cancellations, while the second quarter has limited scatter sale inventory, but prices are running 50% above upfront rates, he said.

The TV operations are seeing advertising money moving from promotions and other marketing activities and back into commercials, Mr. Karmazin said. Spending is coming from a variety of advertisers, including automotive, packaged goods, entertainment, telecom and others, he said.

Calming investors' concerns
In a conference call with analysts, management also tried to calm investor concerns about Mr. Karmazin's future with Viacom, a source of continued industry speculation. Mr. Redstone said both men are working "very cooperatively" with a negotiating committee to reach agreement on Mr. Karmazin's new contract.

Mr. Karmazin also said he will be filing to sell $10 million worth of Viacom stock, but said the sale is not related to his contract negotiations. The sale is meant to fund a $10 million tax liability created by exercising a block of 10-year-old stock options that are coming due, and the sale represents only about 2% of its Viacom holdings, Mr. Karmazin explained.

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