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Viacom Falls After Reporting 3% Decline in Advertising Sales

Feb. 2 (Bloomberg) -- Viacom Inc. fell the most in two months after reporting fiscal first-quarter revenue below analysts’ estimates and a 3 percent decline in advertising sales at the cable-television unit that includes MTV and Nickelodeon.

The stock slumped 3.1 percent to $45.40 at 9:41 a.m. in New York before, after touching $45.18 for the biggest intraday decline since Dec. 1. Net income in the period ended Dec. 31 dropped 65 percent, hurt by costs of $383 million related to a dispute with the former shareholders of Harmonix, creator of the “Rock Band” video games, sold in 2010, the company said.

Nickelodeon’s audience shrank during the Christmas holiday period, the childrens network’s biggest quarter of the year, according to Nielsen Holdings NV. Nickelodeon contributes about 15 percent of Viacom’s cable-TV advertising revenue annually and 25 percent during the December quarter, Mike Morris, an analyst with Davenport & Co., wrote in a Jan. 10 note.

Viacom will lift ratings at Nickelodeon with new programs throughout the year, Chief Executive Officer Philippe Dauman said at an investor conference in December.

Net income fell to $212 million, or 38 cents a share, in the period ended Dec. 31, compared with $610 million, or $1, a year earlier, New York-based Viacom said today in a statement.

Excluding the Harmonix charge and other items, profit of $1.06 beat the average of analysts’ estimates by 1 cent.

Sales climbed 3.2 percent to $3.95 billion. Analysts predicted $3.99 billion on average.

Cable networks contributed 92 percent of Viacom’s fiscal 2011 operating income, with the remainder coming from its Paramount Pictures film studio.

(Viacom executives plan to discuss results on a conference call at 8:30 a.m. New York time. To listen, click LIVE <GO> or dial +1-888-791-4324.)

To contact the reporter on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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