Viacom Revenue Down 7% in Q1

Domestic ad revenue down 9% with media networks reporting similar drop in operating income

Viacom reported a 9% drop in dometic ad revenue in the first quarter with worldwide ad sales down 11%. Net earnings for the first quarter were down 34%, to $177 million.

The company's media networks, which include the MTV Networks group of cable channels, reported operating income down 9%, from $694 million in the prior period to $629 million for the quarter to the end of March.

Overall at Viacom, operating income was down 22%, to $442 million. Revenue was down 7%, to $2.91 billion, on lower ad revenue and currency exchange values.

President and CEO Philippe Dauman said in a statement, "The overall advertising market remained soft as marketers continue to adjust their spending to the recessionary conditions."

The results were in line with analysts' expectations given ratings declines at MTV Networks. Though a 37 percent decline in ancillary revenues was higher than expected.

Viacom attribute the drop to high sales of music video game "Rock Band", in the year ago quarter.

Morgan Stanley said it expects the second quarter to reflect a slightly worse ad climate, but commented that Viacom's results bode well for a decent upfront.

On Wednesday, Time Warner reported its cable networks saw a 2 percent decline in ad revenue, compared with Viacom's 9 percent decline.

Despite the recession, Viacom's commitment to spend on programming, despite cuts elsewhere, was evident in the quarter. Media networks programming costs rose 3 percent.

Viacom's debt decreased to $7.37 billion compared with $8 billion at the end of 2008.