• by David Goetzl  @dgoetzl, November 10, 2006

Viacom's new CEO plans to turn MTV Networks into a digital cash cow at a rate far exceeding his predecessor. Philippe Dauman, who took the reins in September, said the company could bring in $500 million in digital revenue next year--two years before Tom Freston had predicted in May.

"We see our digital ad sales expanding at high double-digit growth rates," said Dauman, speaking on a conference call Thursday with analysts to announce results for the third quarter.

However, Dauman said he has no intention of making a high-profile, high-priced acquisition. Instead, he is focusing on expanding the company's current crop of brands on new platforms, adding that the company has streamlined its acquisition operations.

The Viacom chief spent the majority of the call ramping up expectations about the company's potential in the digital arena, where the sales team has undergone a recent reorganization. "Managing the transition of our business from the traditional linear world to one that embraces a digital world is our No. 1 priority," he said.

The $500 million revenue prediction was striking, because it signaled Dauman's mandate and eagerness to outdo Freston in an area in which Viacom executive chairman Sumner Redstone felt he under-performed. There's also a "good chance" the company, which recently took full control of BET.com and is interested in monetizing its Paramount Pictures library online, could reach the half-billion mark in 2007.

Separately, Dauman said Paramount, the studio that produced "Happy Days" and "Cheers," wants to return to TV production. The movie studio is led by Brad Grey, an executive producer on "The Sopranos," and Gail Berman, who oversaw the development of multiple hits at Fox. Dauman intends to take advantage of their skills in the TV area. "You can rest assured we will do it in a smart, low-cost way with a high return on investment capital."

The move would involve at least one thorny issue: What to call a TV arm, since CBS Corp. now operates CBS Paramount Television. When CBS split with Viacom earlier this year, Paramount Television fell under its umbrella.

His comments mirror what CBS CEO Leslie Moonves has been saying about his company's interest in creating a low-risk movie studio.

Viacom also announced that CFO Mike Dolan would be stepping down to be replaced by longtime Dauman colleague and ally Tom Dooley. The two had been at Viacom for years until their dual roles were replaced by Mel Karmazin, after CBS and Viacom merged.

But while Dolan exits, Dauman said he has convinced MTV Networks CEO Judy McGrath--a Freston ally--to remain in her post, as well as Grey and other top executives. Viacom posted an approximate 7% percent gain in domestic ad sales for its cable networks in the third quarter, versus a year ago. "This is a very good performance given the somewhat soft environment," Dauman said.

Executives predicted a similar increase would occur in the fourth quarter.