Earnings Preview: Viacom to report 3Q results

posted: 23 DAYS 9 HOURS AGO

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NEW YORK -Viacom Inc., the media conglomerate controlled by Sumner Redstone, reports third-quarter earnings before the market opens on Tuesday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: The continuing ad slump is expected to hurt third-quarter revenue at Viacom, which owns Paramount Pictures, cable properties including the BET and MTV cable networks and the "Rock Band" video games. But Wall Street anticipates a slight improvement in earnings as game and film sales improve.

The market research firm NPD Group said September game sales showed a year-over-year uptick of 1 percent after six months of double-digit declines. Viacom's "The Beatles: Rock Band" was among the top 10 best-selling games.

Cowen & Co. analyst Doug Creutz is expecting a "good performance from Paramount's recent film slate, most notably 'Paranormal Activity.'"

Meanwhile, Redstone has removed some uncertainty about his control of the company. Last month he said his holding company, National Amusements Inc., was selling off a portion of its controlling stake in Viacom and CBS Corp., raising nearly $1 billion to pay off the rest of the company's debt. But he said that even after the sale, National Amusements will remain the controlling shareholder. The sale appears to have alleviated National Amusements' debt burden and eliminated the threat that lenders would force it to sell any more of its stake in either company to raise cash.

BY THE NUMBERS: Analysts, on average, expect Viacom's revenue to fall 3 percent to $3.3 billion, with earnings per share of 57 cents, up from 55 cents a year ago, according to a survey by Thomson Reuters.

ANALYST TAKE: Cowen & Co.'s Creutz said he expects "The Beatles: Rock Band," Paramount films and favorable exchange rates to boost earnings. But he said investors have largely anticipated the results, leaving shares little room to head higher. He has a "Neutral" rating on the shares.

WHAT'S AHEAD: Paramount will distribute four new films in 2010, including the Marvel action hero movie "Iron Man 2," DreamWorks Animation's "How to Train Your Dragon," "Shrek Forever After," and "Oobermind," a super hero spoof.

STOCK PERFORMANCE: Viacom shares rose $5.34, or 24 percent, during the quarter to $28.04.

2009-11-02 09:58:40