• by Wayne Friedman , February 12, 2009

Pitted against other cable network groups, Viacom's cable networks didn't survive the onslaught of the accelerating economic decline in the fourth quarter.

Although Time Warner, News Corp. and Disney ad-supported networks managed to eke out gains, Viacom's networks--MTV, VH1, Comedy Central, TV Land, BET and Nickelodeon--witnessed ad sales sinking 3% in the fourth quarter to $1.35 billion.

All this contributed to Viacom's fourth-quarter 2008 profit dropping 69% to $173 million from $560 million in 4Q 2007. Revenues from Viacom's media networks inched up 1% to $2.48 billion. Other ancillary revenue was flat at $462 million. Viacom said television license fees fell 13%.

For Viacom's big MTV Network, the problem is declining ratings. Viacom CEO Philippe Dauman said ratings in the fourth quarter were down 21% versus a year ago. So far in the first quarter, things are improving. MTV has cut its losses to just a 12% decline. In the fourth quarter, VH1 ratings were off 8%.

Revenue from filmed entertainment, which includes film studio Paramount Pictures, and home-entertainment revenue, was 2% lower to $1.81 billion. Home-entertainment revenue witnessed a 6% drop to $1.02 billion. Viacom's DVD business has also been suffering for all of 2008. DVD sales declined by 9% for the year to $14.5 billion.

"In the fourth quarter, we saw the conversion rate of box-office revenue into DVD purchases decline on all but the most popular titles," said Tom Dooley, CFO. Viacom said it earned strong DVD sales from "Iron Man" and "Indiana Jones and The Kingdom Of the Crystal Skull."

Viacom's theatrical movies revenue grew 28% to $350 million in the latest quarter, primarily due to the strong performance of "Madagascar 2: Escape to Africa."