Viacom Profit Drops

NEW YORK, November 9: Viacom’s net profit for the third
quarter fell 15.7 percent to $356.8 million, due to a loss in its film division
and the $62 million severance payment to ousted president and CEO Tom Freston.

The company reported revenues of $2.66 billion, a 7 percent
gain, led by the cable networks. Operating income fell 12 percent to $655.5
million.

The newly installed president and CEO, Philippe P. Dauman,
said of the quarter, "We achieved significant financial and operational
progress and we remain on track to deliver on our goals for the full year. I see even greater opportunities to
build for future growth as we harness Viacom's powerful brands, popular content
and unique connections with the audiences that are driving the digital
revolution. Viacom is rich in the short-form content that is highly attractive
to online consumers, underscored by our position as a leading entertainment
content property on the Internet today with an aggregate 37 million monthly
unique visitors in September. We intend to continue to invest in our future and
enhance profitability for the long term, as well as for the short term. We are
making rapid progress and are intensifying our focus on continuing to grow our
industry-leading flagship brands both here and in promising markets abroad, on
accelerating the growth of our less-developed cable channels and underutilized
content libraries, and on driving existing and newly created programming to
audiences across every platform.
In addition to internal development, we will continue to apply a
rigorous and selective approach to acquisitions that emphasizes coordination
and execution and will add businesses in core areas that offer compelling
experiences for our consumers."

Cable Networks segment revenues increased 10 percent to
$1.84 billion. Worldwide advertising revenues at the Cable Networks segment
increased 7 percent to $1.1 billion and affiliate fees climbed 12 percent to
$510.4 million. Segment operating income increased 14 percent to $777.7
million.

Entertainment segment revenues were up 1 percent, to $856.5
million. DreamWorks L.L.C. and the distribution activities for DreamWorks
Animation and DreamWorks live-action library films contributed $279.2 million.
The division recorded an operating loss of $6.7 million, a 106 percent drop
from last year’s profit of 108.2 million.

In related news, Viacom today announced the resignation of
CFO Michael J. Dolan, who will step down at the end of this year. The company’s
senior EVP and chief administrative officer, Thomas Dooley, will assume Dolan’s
duties.