Viacom wins by losing

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Viacom Inc. (VIA) may finally be starting to emerge from Wall Street's dog house even if its second quarter results stunk.

Net income at the parent company of MTV Networks and Paramount Studios fell 32 percent to $277 million, or 46 cents per share, compared with $406 million, or 65 cents, a year earlier. Revenue at the New York-based media conglomerate fell 14 percent to $3.3 billion. Excluding one-time charges such as severance costs, profit was 49 cents a share beating Wall Street estimates. Revenue failed to top the estimates of $3.56 billion.
Media Networks revenue decreased 8 percent to $1.97 billion, principally due to a 41 percent decline in ancillary revenues driven by lower sales of the music video game Rock Band. Advertising revenue plunged 8 percent reflecting continued softness in the marketplace. Results were also hurt by a decline in box office receipts and DVD sales.

Viacom should continue to benefit from cable taking advertising market share from broadcast networks. Evidence of this trend is apparent from NBC's recent naming of Jeff Gaspin, the head of its cable operations, to replace the once highly regarded Ben Silverman as president of NBC Universal Entertainment.

Last year, Viacom Chairman Sumner Redstone was bedeviled by huge corporate debt and a divorce from his much younger wife. He may have proven his many detractors wrong.

Shares of Viacom have soared more than 53 percent over the past six months. Its former corporate sibling CBS Inc. (CBS) have risen more than 31 percent during that same time.
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