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Viacom CFO out; Cable Ad Sales Miss Target - Broadcasting & Cable

Viacom CFO out; Cable Ad Sales Miss Target

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The executive shuffle at Viacom continues as new President and CEO Philippe Dauman sends CFO Mike Dolan out the door. Dolan was deemed the executive least likely to survive the regime change at Viacom after the ouster of ex-CEO Tom Freston. Dauman returned to the company accompanied by Tom Dooley, currently chief administrative officer but CFO during the 1990s, and he was widely expected to return to that post. Indeed, the company has named Dooley to replace Dolan.

Also, that advertising turnaround MTV Networks executives had once promised fizzled. Cable network ad revenues increased 7% during the third quarter ended September, 2-3 points less than some analysts had expected. After the first quarter, MTVN blamed soft ad sales on a one-time calendar issue and confidently predicted that sales would rebound later in the year. The 7% growth is better than that of some TV companies but still far short of the strong double-digit percentage growth the cable division had generated in recent years.

Asked on a conference call with securities analysts if the disruption following Freston’s firing had any effect on ad sales, Dauman sharply responded that "management change had nothing to do with it. I think you have to look at the conditions in the market. We believe we have significantly, as we always do, outperformed the market in this regard."

Despite the continuing ad drift, the cable division performance was lifted by strong gains in license fees from cable and DBS operators, particularly overseas. Hence, total cable network revenues increased 10% to $1.8 billion and operating income surged 14% to $777.7 million.

At the Paramount movie unit, however, sales increased just 1%, even though this year’s results include those of recently acquired studio DreamWorks. The problem is that last year, the company had revenues from hit War of The Worlds in the quarter and this year Paramount had no big late-summer releases.

So, company-wide, Viacom’s revenues increased 7% to %2.7 billion, and operating income slid 12% to $655.5 million.

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