• by David Goetzl  @dgoetzl, July 30, 2008

Viacom's CEO painted a dim picture of the scatter market Tuesday, indicating that it lost steam in May and the slowness continues. On a conference call with investors, Philippe Dauman said scatter spending saw the reins pulled in midway through the second quarter--and it hasn't regained its strength.

Not surprisingly, since most media sellers are experiencing similar hurdles, he said the auto category saw traditionally large spenders curtail scatter activity, as did retailers and "certain consumer goods." "It was very category-specific," Dauman said.

Nonetheless, even as scatter dollars slowed, MTV Networks had a solid "adult" upfront with CPM increases in the high single digits (and double digits in volume), Dauman said. Still, the upfront in June could prove to be less impressive come January if the economy continues to struggle--and advertisers use options to cancel some of their spending commitments. "What we don't know about is where the economy is going to be headed ... and how that will impact the scatter market," Dauman said on the call to discuss second-quarter results.

Worldwide ad dollars in the second quarter rose 2% to $1.17 billion, with domestic intake up 1%.

Overall, company revenues rose 21% to $3.86 billion, bolstered by strong growth at the Paramount film studio. A year ago in the second quarter, the Paramount film operations accounted for 41% of revenues; this year, that was up to 46%. Paramount posted 35% growth to $1.8 billion, thanks partly to the releases of "Iron Man" and "Indiana Jones."

Video game "Rock Band" was a growth driver, helping ancillary revenues increase 62% to $307 million globally. Operating income was up 13% to $792 million overall.

Viacom is managing to cope with the bumpy economy partly by cutting costs and streamlining operations, Dauman said--adding that "there is more work to be done in this regard," although he did not cite specifics. He did say that no cuts will be made in program development or production--which includes Web offerings.

Dauman said MTV Networks--with its strong appeal among the 12-to-24 and 18-to-34 demos--is taking steps to try to attract new advertisers as traditional ones cut spending. One strategy is bolstering programming targeting a 50-plus audience--highlighted by TV Land and its added original productions--looking to appeal to pharmaceutical, financial services and other older-aiming marketers. Spike and Nick at Nite could attract some of those dollars, along with TV Land.

"We are working to target demos where we are not as dominant," he said.

Dauman suggested that affiliate revenue could increase going forward as 10-year agreements for carriage of Comedy Central are renewed. That network, propelled by the "Daily Show" and "Colbert Report," has a higher profile than when the previous deals were cut.