Viacom Cable Ad-Revenue Growth up 4%

New Upfront Strategy Includes DVR Data and Shorter Commercial Pods

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NEW YORK ( -- Viacom's restructuring of MTV Networks' ad sales team yesterday came at a time when the company could use some momentum in its revenue growth.
Philippe Dauman
Philippe Dauman

The company reported fourth-quarter cable ad-revenue growth of 4% today in an earnings call with investors, down from 7% in the third quarter and 10% in second quarter; cable ad revenue was up 16% the year-ago period.

Ratings shortfalls
Thomas Dooley, senior exec VP-chief financial officer, said the earnings came in shorter than expected due to ratings shortfalls at Nick at Nite and TV Land and, to a lesser extent, MTV, as well as weaknesses in the beverage and video game categories.

In addition to MTV and Nickelodeon, Viacom is also the parent of Comedy Central, BET, VH1 and Spike, and home of Paramount Pictures and the DreamWorks movie studio.

Despite the softness in its cable TV operations, overall, Viacom reported fourth-quarter net earnings of $480.8 million, or 69 cents a share, compared to $129.5 million, or 17 cents a share, in the year-earlier period.

MTVN's ad sales will be divided into three clusters comprised of Entertainment; MTVN and Logo Group; and Kids and Family. Philippe Dauman, president-CEO, candidly referred to the changes as "overdue" and said they will help Viacom adapt to its cable networks' shifting structure and target demographics more specifically.

"Our clients are looking for integrated solutions where they touch their customers, our consumers, more closely. And we are uniquely positioned to do that for them," he said.

Cable upfront strategy
The new ad-sales team is one of several changes Viacom has made going into this year's cable upfront, with plans to include DVR ratings data in its ratings report this year as well as introduce shorter commercial pods for its programming. Mr. Dauman described the new upfront approach as "the way the cable industry is moving. We're going to make it more of a year-round effort and make great use of tremendous strength in that area."

Viacom's strongest assets in 2006 were its acquisitions, which accounted for a significant portion of its digital revenues. The company expects to log $500 million in digital revenue in 2007. Its recent content-distribution deal with peer-to-peer site Joost has already boosted traffic to its linear cable networks' sites, aiding Viacom in its efforts to monetize video content after boycotting YouTube last month.

Critical year
This year will be a critical for Viacom as it adjusts to a new ad sales strategy and seeks to drive growth on its digital and mobile platforms. One investor asked Viacom chairman and founder Sumner Redstone if he ever intended to sell the company should intentions to boost revenue not go as planned.

The ever-candid Mr. Redstone replied, "I am not going to even consider if things don't work out. I have no intention of selling this company, I love the company, love the management, I love Philippe and Tom and the gang. The company is not for sale."
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