Viacom lost about $200 million in the wake of the Sept. 11 terrorist attack according to company president and chief operating officer Mel Karmazin.
Karmazin disclosed the number (and the ones that follow) at the Goldman Sachs "Communicopia" media conference in New York Tuesday, as way of amplifying Viacom's earlier lowering of its year-end profit projection. CBS lost $85 million in pre-empted advertising as the network went commercial free for almost five full days covering the attack.
The company's 35 owned TV stations lost another $40 million in advertising and Infinity lost $25 million, said Karmazin. The company's cable channels lost a combined $5 million, the syndication division lost $4 million and UPN lost about $3 million. The company's network news division and owned TV and radio stations spent an additional $15 million or so above normal covering the attack.
That will reduce the company's third quarter earnings before interest, taxes, depreciation and amortization to about $1.3 billion, Karmazin said. Earlier the company had projected about $1.5 billion in EBITDA for that quarter. Karmazin said the best guess now for fourth quarter earnings is about $1.3 billion or $300 million less than previously anticipated.
If the projections hold-and they are the company's most "bearish" estimates, Karmazin said--that will bring total EBITDA for the year to around $5.1 billion, or about $500 million less than previously anticipated, but slightly higher than last year's $5 billion total. On the positive side, most advertisers who cancelled ads are now back, Karmazin said, including Southwest Airlines, which of course is trying to convince people to start flying again.
And last week, Karmazin reports, CBS sold $40 million in scatter advertising, at prices above upfront rates, which CBS claims were up 1% to 2% overall. But uncertainty remains for the near term, he said. A likely U.S. retaliation for the terrorist attacks will probably prompt more commercial-free coverage by the networks, lost advertising and increased news costs.
As for 2002, all Karmazin would say is that the fourth quarter of next year is going to be "a great deal better than this fourth quarter." And companies will still need to advertise in the long run, he said.
- Steve McClellan