Box office hits help lift Viacom profit 15 percent

By Paul Thomasch

NEW YORK (Reuters) - Viacom Inc's quarterly profit rose 15 percent, breezing past expectations, as consumers set aside money worries to take in hit movies like "Transformers" and scoop up the new Beatles video game.

Cost-cutting also helped Viacom, the first of the major media conglomerates to report quarterly earnings. Signs that consumers were willing to open their wallets -- and suggestions of a slight improvement in advertising sales -- may bode well for Time Warner Inc and News Corp.

Viacom, which runs a host of media businesses including MTV, Comedy Central and the Paramount movie studio, said on Tuesday that profit rose to $463 million, or 76 cents a share, from $401 million, or 65 cents a share, in the same period a year ago. Revenue fell 3 percent, largely in line with Wall Street expectations.

Adjusted earnings totaled 69 cents per share, well ahead of the 57 cents per share analysts had expected. Shares of Viacom rose slightly in morning trading.

Viacom is not as dependent on advertising as some media companies -- such as corporate sibling CBS Corp -- and is generally helped by fees that cable companies pay to carry its networks. Affiliate sales rose 10 percent in the quarter.

Viacom nonetheless gets about 30 percent of annual revenue from ads, and the slump has proven painful. In the third quarter, U.S. ad revenue fell 4 percent, but executives pointed to signals that the ad climate had improved.

"Over the course of the third quarter, we started to see some of the negative economic trends that we've all been dealing with begin to attenuate," Chief Executive Philippe Dauman told investors on a conference call.

"While I expect the road to recovery will be a bumpy one, I do believe the economy, particularly in the U.S., now is moving in the right direction," he added.