Viacom Jumps Most Since 2009 After Boosting Buyback, Increasing Earnings

Viacom Inc. (VIA/B), owner of the MTV network and Paramount Pictures, gained the most in more than two years after posting profit and revenue that rose more than analysts estimated and adding $6 billion for stock buybacks.

Earnings, excluding some costs, climbed to $1.06 a share in the period ended Sept. 30 from 75 cents a year earlier, New York-based Viacom said today. Analysts predicted $1.02 a share, the average of estimates compiled by Bloomberg.

The company benefited from growth in its television and film businesses. Revenue from the TV unit, which includes Nickelodeon, MTV and Comedy Central, increased 7.7 percent to $2.29 billion as advertising and affiliate fees climbed. Filmed entertainment sales rose 46 percent in the quarter to $1.79 billion, driven by the latest installment in the “Transformers” franchise.

“We expected a strong number for film, and it was a big beat,” said Alan Gould, an Evercore Partners analyst in New York, who rates the shares “overweight” and doesn’t own any.

Viacom, controlled by Chairman Sumner Redstone, 88, rose 8.2 percent to $43.61 at the close in New York, the most since March 2009. It has advanced 10 percent this year.

Chief Executive Officer Philippe Dauman said in the statement the stock buybacks demonstrate “our confidence in Viacom’s long-term outlook,” and also cited the company’s strong cash flow.

As of Nov. 9, Viacom had $7.22 billion remaining of its buyback program. In the fiscal year ended Sept. 30, the company repurchased $2.5 billion of stock, including $900 million last quarter.

Advertising Gains

Fourth-quarter sales rose 22 percent to $4.05 billion, compared with the average analyst estimate of $3.75 billion. Net income tripled to $576 million, or $1 a share, from $189 million, or 31 cents, a year earlier.

The TV-networks revenue gain reflects a 7 percent increase in worldwide advertising and 11 percent growth in the affiliate fees paid by cable and satellite TV operators, Viacom said.

Viacom joins other media companies in reporting gains in advertising for the most recent quarter. News Corp. (NWSA), owner of the Fox broadcast network, increased domestic ad revenue 13 percent and Time Warner Inc. (TWX), the owner of cable channels TNT, TBS and Cartoon Network, improved its TV-ad revenue 9 percent.

This quarter, Viacom will “begin to reap the benefits of the strong upfront completed in June,” Dauman said on a call with analysts, referring to advertising sold for this season.

‘Transformers’

The movie unit benefited from the release of “Transformers: Dark Side of the Moon” at the end of June. The Paramount film generated $1.12 billion in worldwide ticket sales, according to researcher Box Office Mojo.

“They had a hell of a quarter at the box office,” Gould said.

For the full fiscal year, the company’s theatrical sales increased 58 percent to $2.18 billion on the strength of franchise films such as “Transformers,” “Thor,” “Kung Fu Panda 2” and “Captain America: First Avenger.”

These releases will help the company drive DVD and pay-TV rights next year, Dauman said on the call. This quarter, the company’s releases include the third installment of “Paranormal Activity,” Martin Scorsese’s “Hugo” and “Mission: Impossible -- The Ghost Protocol,” starring Tom Cruise.

To contact the reporter on this story: Edmund Lee in New York at elee310@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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Viacom Inc. Chairman Sumner Redstone

Jonathan Alcorn/Bloomberg

Viacom Inc. Chairman Sumner Redstone.

Viacom Inc. Chairman Sumner Redstone. Photographer: Jonathan Alcorn/Bloomberg