By SETH SUTEL
AP Business Writer
NEW YORK – Viacom Inc., which owns CBS, MTV, and the Paramount studios, posted a net loss of $42.5 million for the fourth quarter Wednesday as the media company struggled through an advertising slump.
The loss, which worked out to 2 cents a share for the October-December period, compared with earnings of $30.4 million, or 2 cents a share, in the same period a year ago.
Revenue fell 5 percent to $6.04 billion from $6.36 billion.
Viacom played down reports of a simmering feud between its two top executives, Sumner Redstone, the chairman and chief executive, and Mel Karmazin, the president and chief operating officer.
"Top management is totally in sync," Redstone told analysts on a conference call. "The mood here is great. Mel and I are getting along great."
Karmazin, who joined the company two years ago as part of its merger with CBS Corp., has full operating authority over Viacom until the end of 2003, when his current contract runs out. Neither he nor Redstone have said publicly what management changes might occur after that time.
Viacom's loss in the fourth quarter came as a tough advertising climate led to a drop in revenue and earnings at its large radio and outdoor advertising subsidiary, Infinity Broadcasting, which remains the largest contributor to the company's cash flow.
Infinity's revenues fell 12 percent in the fourth quarter compared with a year ago, and earnings before interest, taxes, depreciation and amortization fell 21 percent, which the company attributed to "continuing softness" in the advertising market.
Viacom's revenue from television rose 2 percent but pretax earnings fell 22 percent as the company absorbed a charge of $53 million to integrate the UPN network with the operations of its other network, CBS.
Without the effect of that charge and adjusting for acquisitions in both periods, television earnings were essentially flat compared with a year ago as revenues rose 5 percent.
MTV Networks also took a restructuring charge of $67 million in the fourth quarter to pay for a previously announced round of layoffs. Chief financial officer Rich Bressler told analysts on the call that the division, which includes VH1 and Nickelodeon, cut 800 jobs.
In addition to the $159 million in restructuring charges in the quarter, which include a $39 million accounting charge at Blockbuster, the company also had a one-time gain of $288 million related to the swaps of television stations and other transactions.
Without the effect of those one-time gains and charges, Viacom's net loss in the fourth quarter was $140 million, or 8 cents a share, compared with a loss of 11 cents per share forecast by analysts surveyed by Thomson Financial/First Call.
Viacom's shares were up $1.04 at $44.20 in midday trading on the New York Stock Exchange.
Viacom also announced the acquisition Wednesday of a second television station in the Los Angeles area, KCAL, for $650 million in cash from Young Broadcasting Inc. Viacom already owns the CBS affiliate in Los Angeles, KCBS, and hopes to save money by operating two stations in the same city, an arrangement it already has in seven other cities.
For the full year, Viacom posted a net loss of $223.5 million, or 13 cents per share, compared with a loss of $816.1 million, or 67 cents per share, for all of 2000. Excluding one-time gains and charges in both periods, Viacom had a loss of 8 cents per share in 2001 and earnings of 15 cents per share in 2000.
Reported full-year revenues rose to $23.22 billion from $20.04 billion in 2000. But after adjusting the figures to reflect acquisitions in both periods, revenues were essentially flat at $23.20 billion for 2001 and $23.09 billion the year before.
