• by Wayne Friedman , August 5, 2005

For Viacom Inc., its advertising picture is beginning to look like a tale of two companies. The company's overall second-quarter results for its continuing operations posted a 6% rise in net income to $762 million--mostly from growth at its filmed entertainment and cable networks units. That is the part of the company to be called Viacom Inc.--after the company splits in two--to be run by Viacom Inc. co-chief operating officer, Tom Freston.

From an advertising perspective, it's the cable networks that continue to be the leaders of the company. MTV Networks, BET, and Showtime witnessed a revenue jump of 14% to $2 billion on a 19% gain in advertising sales. Income rose 14% to $711 million.

But things are different at the other side of the company--to be called CBS Corp., and to be run by co-Chief Operating Officer Les Moonves. Viacom's television unit--consisting of CBS, UPN, the stations, production, and syndication--saw revenue slip 1% to $2 billion, from lower license fees and a 4% advertising pullback for its local stations.

Still, advertising did rise at CBS and UPN networks by 7 percent. Overall net income fell 16% to $439 million. The two other parts of the future CBS Corp.--radio and outdoor advertising revenue--had modest growth. Radio revenue inched up 1% to $567 million, with income coming in at 2% higher to $273 million. Outdoor advertising revenue increased 3% to $499 million, with income 5% higher to $82 million.

New cable networks are in the works, says Freston--including launching ethnic networks in the United States. MTV has already launched a network called MTV Desi, targeting second-generation South Asians, and has plans for similar networks for Korean-Americans, Russian-Americans, and Chinese-Americans.

While the current whole company derives about 50% of its revenue from advertising sales, those numbers will shift dramatically when the company becomes two. The advertising piece of the new Viacom revenues will dip below 50%, according to analysts. This is because the new Viacom, with its cable-centric assets, will get a greater percentage of its revenues for cable subscriber fees. CBS Corp., however, will be much more advertising-dependent, with 70% of its revenue coming from advertising sales, according to Moonves.