Syndies not what it was

But Viacom President Karmazin is still bullish on revenue, profit outlook for 2001
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While TV ad sales posted double-digit gains at both CBS and the CBS-owned TV stations in the third quarter, total revenue for the Viacom TV segment increased just 3% (on a pro forma basis) to $1.85 billion, a gain of less than $60 million. But to hear Mel Karmazin tell it, everything is doing so well that Viacom's biggest problem may be convincing the cynics.

The big difference for the segment compared with a year ago is domestic syndication revenue, according to Viacom Chief Financial Officer Fred Reynolds. He told analysts last week that the company generated $120 million less in syndication revenue in this year's third quarter, when the offerings includedSabrina, the Teenage Witch;Moesha,the UPN hit; and a few remainingEverybody Loves Raymondoff-network markets.

A year ago, the company reaped big dollars from the sale of
JAG; Star
Trek: Voyager; Caroline in the City
andPromisedLand. TV cash flow for the quarter was up 39%, to $369 million.

Viacom President and Chief Operating Officer Karmazin stressed to analysts that he doesn't see any problems with the ad economy going forward.

The company will end up with double-digit ad gains across its major sectors (TV, cable and radio/outdoor) for the entire year 2000, he said. Karmazin also predicted that Viacom will realize record fourth-quarter revenue and cash flow and 20% growth in revenues and profits for 2001 as well.

The company had recently held a retreat for top executives to brainstorm about "how to prove the doom-and-gloom analysts wrong" about the company's growth expectations for next year.

"The advertising business is great," said Karmazin. Especially for Viacom. He said the company is gaining market share across its ad-driven businesses, noting that they were up double digits while overall advertising expenditures were up just 7%. "We have not seen any advertisers who are branded go away," he said. Categories in which spending increased in the third quarter included autos, wireless and beverages.

Only one category is down dramatically, according to Karmazin, and that's the dotcom business. But he also acknowledged that daytime was "a little softer" than other dayparts.

Most of the cable networks posted double-digit ad gains as well. The company's cable sector posted a 23% pretax- cash-flow gain, to $425.8 million, on a 13% revenue gain, to $1 billion. Two exceptions to the double-digit performance were Nickelodeon and CMT. Karmazin said Nick, like other kids networks, was feeling the ill effects of a glut of available ad inventory.

CMT, the country music television network, should do better next year now that it's a part of the MTV Networks group, he said. CMT has seen increased distribution since being attached to MTV networks and that should soon translate to higher ad revenue, according to Karmazin.

He also said negotiations are still on going with Chris-Craft (and, presumably Fox) about affiliate renewals with UPN. If that happens, he said, Viacom is confident it can make UPN profitable, if not in 2001 then "soon thereafter."

For the first nine months of the year, TV segment revenues were up 5%, to $5.7 billion, on a 50% pretax-cash-flow gain, to just over $1 billion. Cable posted a 14% revenue gain, to $2.9 billion, with a 23% gain in cash flow.

Overall, Viacom had a 7% revenue gain in the quarter, to almost $6 billion on a 22% cash-flow gain, to $1.4 billion. For the first nine months, revenues were up 9%, to $17.3 billion, with an 18% cash-flow gain, to $3.6 billion.

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