Aug. 2 (Bloomberg) -- Viacom Inc.'s second-quarter profit exceeded analysts' estimates as the owner of MTV and Paramount Pictures increased cable sales and ``Blades of Glory'' bolstered box-office returns.

Net income fell to $434 million from $437.3 million a year earlier, New York-based Viacom said. Per-share earnings rose to 63 cent from 61 cents because of fewer shares outstanding. Profit totaled 54 cents excluding a gain from selling an MTV Russia stake and an investment write-off, topping the 50-cent average of 17 analysts' estimates compiled by Bloomberg. Sales advanced 13 percent to $3.19 billion.

Chairman Sumner Redstone, who is publicly feuding with his daughter and heir apparent Shari, reported sales at the MTV and Nickelodeon cable networks gained 10 percent. Paramount increased sales by 20 percent. The studio, helped by the purchase of DreamWorks SKG, set a box-office record by reaching $1 billion in domestic sales sooner than any competitor.

``The studio was in a slump and it needed the DreamWorks acquisition and a new slate of films to kick in,'' said Fred Moran, an analyst with Stanford Group in Boca Raton, Florida, who rates the shares ``buy'' and doesn't own them. ``The cable networks benefited from steady advertising demand, good subscriber growth and acquisitions.''

Class B shares of Viacom rose 63 cents, or 1.7 percent, to $38.41 at 4:01 p.m. in New York Stock Exchange composite trading. They have declined 6.4 percent this year. Share repurchases reduced the stock outstanding by 4.6 percent, boosting earnings.

Family Feud

The rift between Redstone, 84, and his daughter, 53, flared publicly when the elder Redstone said in a letter published on July 20 at Forbes.com that his children contributed little to the success of Viacom and CBS Corp., the other media company he controls.

Shari Redstone, a vice chairman at both companies, had been groomed as a successor to her father. The Wall Street Journal reported the two were in talks that could lead to Redstone buying out his daughter's 20 percent interest in National Amusements Inc., the family company that controls Viacom and New York-based CBS.

Last year, Sumner Redstone named a longtime associate, Philippe Dauman, to replace Tom Freston as chief executive officer of Viacom, giving him a mandate to expand Viacom's presence on the Internet.

Online Accords

Dauman has made agreements to put more Viacom programs online and struck Internet advertising deals with Yahoo! Inc. and Joost Inc. He said on a conference call today the company is ``on the way to exceed our goal'' of $500 million in sales this year from Web sites and mobile phones.

Viacom is also seeking $1 billion in damages from Google Inc., claiming the search-engine company's YouTube video-sharing Web site used Viacom clips without permission.

Second-quarter sales rose from $2.82 billion a year earlier and beat the $3.05 billion average of 13 analysts' estimates compiled by Bloomberg.

Profit at the cable unit, which also runs the Comedy Central channel, rose 3.4 percent to $734.2 million on sales of $1.92 billion, the company said today in a statement.

Dauman said Viacom booked higher sales from the advance advertising, or upfront, market from a year earlier and that he turned away some deals because the in-season, or scatter, market has been strong. Viacom's cable ad sales rose 6 percent in the quarter worldwide and 4 percent in the U.S., he said.

Paramount

The entertainment division reported profit more than quadrupled to $21.4 million on $1.31 billion in sales. Total operating income increased 6.1 percent to $701.8 million.

This quarter Paramount will benefit from the hit film ``Transformers,'' for which much of the production cost was booked in the second quarter. The film, from DreamWorks, had taken in $287.6 million in U.S. box-office sales as of July 29, according to Box Office Mojo LLC, based in Burbank, California.

Last year, Viacom paid $1.6 billion for DreamWorks, the studio founded by Steven Spielberg, Jeffrey Katzenberg and David Geffen, to expand production at Paramount.

In the quarter Viacom recorded a $65 million after-tax gain on the sale of an MTV investment in Russia. It had $22 million in after-tax expenses to write off the value of its investment in Amp'd Mobile, which filed for bankruptcy, and $7 million in restructuring costs at MTV.

Dauman has said Viacom will expand overseas and increase international profit margins by 10 to 15 percentage points next year. During the quarter the company announced deals to open a Nickelodeon theme park in Dubai and license film characters for another park in the United Arab Emirates.

Redstone said he has discussed with Chinese officials building a theme park there.

Viacom completed the sale of its music publishing unit, Famous Music, to Sony/ATV Music Publishing for $370 million on July 31 and plans to record a gain on the deal this quarter.

To contact the reporter on this story: Don Jeffrey in New York at Djeffrey1@bloomberg.net.

Last Updated: August 2, 2007 16:04 EDT